NFTs or non-fungible tokens are unique one-of-one digital assets that are backed by and verified by the blockchain. NFTexplained.info is a team of long term crypto investors who are well versed in the NFT space.
In this article we will explain what an NFT auction is and how they work on OpenSea.
NFT auctions on OpenSea can occur in two ways. For a sale to the highest bidder, OpenSea will automatically accept the offer if it finishes above 1 ETH (& OpenSea will pay the gas fee). For sales with declining price, you set the starting price (e.g. 3 ETH), duration (e.g. 7 days), and ending price (e.g. 1.5 ETH).
Our team notes that offers under 1 ETH in sell to the highest bidder, must be accepted by the seller in order for the transaction to go through while offers that finish above 1 ETH will be automatically accepted by OpenSea.
If the NFT holder elects the sell to the highest bidder setting, a reserve price can also be set – this means if no offer is equal or greater to the reserved price, the auction will end without a sale.
Why Can’t I Auction My NFT On OpenSea?
NFTs that are based on the ERC-1155 token – which is also known as a semi-fungible token – can not be listed for an auction. Only ERC-721 tokens – which are also known as 1 of 1 tokens – can be listed for an auction on OpenSea.
If you are interested in learning about ERC-1155 tokens, our team has more thoroughly discussed that in this article, linked here.
Now NFTexplained.info will cover some FAQs you may have regarding NFT auctions.
Should I Auction Or Sell My NFT?
As a general statement, you should auction off your NFT when you think there is enough demand to sellout as an auction may allow for the price to appreciate more than if you were to sell it. If there is less demand, selling your NFT in a more traditional manner may be a better option.
How Long Do NFT Auctions Last?
As a general statement, the amount of time an NFT auction lasts depends on the NFT marketplace you are using to auction off your NFT. As long as an NFT auction continues to receive new bids, it can last indefinitely (via 10 min extensions) on OpenSea. OpenSea allows you to auction an NFT for as long as 6 months.
OpenSea also extends the auction if a bid is made in the last ten minutes; if this occurs, OpenSea extends the auction for an additional 10 minutes.
OpenSea also allows you to cancel the auction at any time. However, this will incur a gas fee (as does any transaction on the Ethereum network).
What Happens When My NFT Sells?
When you sell an NFT, you receive the cryptocurrency the NFT sold for minus the marketplaces fee (OpenSea takes 2.5%) and the original creator fee (on Opensea, the creator can take up to 10% on secondary sales).
The buyer will then receive the NFT in his account.
Royalties can be set on OpenSea by editing the collection they belong to. This will be found under the “Creator Earnings” section.
Does Minting An NFT Mean I Own It?
Minting an NFT means you are the first person to tokenize or create a digital receipt proving you are the owner of a digital asset via blockchain technology. Buying an NFT means it has already been minted, however ownership is transferred to the buyer (and everyone can see any and all previous owners).
Our team has a full guide on minting NFTs, to learn more about that process and how it works, click here.
Previous owners or the hands an NFT has digitally touched is known as provenance and our team has a full article which we will link here.
The NFT space is always changing and the technology is quite new. Our team is incredibly excited to see what will happen as time passes. To get the latest news in this rapidly evolving space, follow our team on Instagram & Twitter!
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