Learn about NFT auctions, how to auction your own NFT marketplace, and why you should use NFT auctions.
One of the most popular people to auction an NFT was Twitter co-founder Jack Dorsey. It wasn’t the first, but since then we’ve seen other NFT auctions involving ridiculous amounts of money. Not only is the hype around NFTs real, but a person can now spend millions of dollars on NFT auctions to purchase digital art from the comfort of their home.
Whether you’re an NFT collector or an NFT creator, understanding how NFT auctions work is one of the first steps to getting the most out of this industry.
What are NFT auctions?
NFT auctions are where certain NFT artworks are sold to interested NFT collectors and the highest bidders place their bids to purchase the NFT artwork. In an NFT auction, the seller sets a minimum price for a given period. Buyers can bid for the amount they are willing to spend on NFT, provided it is above the minimum price. The NFT is then sold to the highest bidder at the end of the auction period.
How does an NFT auction work?
Not all NFT marketplaces conduct NFT auctions the same. If you want to hold an automatic, timed NFT auction, you can set up a backup auction or a scheduled auction.
In a reserve auction, a public reserve price is set. Once reached, it starts a 24-hour countdown to the end of the auction, allowing other collectors to bid before the deadline. Reserve auctions work well when you’re not in a rush to sell an NFT piece of art, but want to at least get some cash for it. Once the reserve price is set, there is no specific time frame to reach – but once it is set, the timer turns off.
In a scheduled auction, specific start and end times are selected along with an optional starting price. The auction will start and end at approximately the times indicated, regardless of whether the bids have reached the starting price. Scheduled auctions are ideal when you know you want to sell an NFT as part of an event during a given time frame or if you want to make the auction a stand-alone event.
Why should you use NFT auctions?
When a product, including NFT, is out of the hands of the original buyer, the principle of supply and demand determines its subsequent market value. Other factors that add value to an NFT are the human condition, rarity, and collective purposefulness of the auction process. Despite the reserve or minimum price of any NFT, it is the market that determines the final value of the NFT in an auction. In other words, each person participating in an NFT auction is unconsciously an evaluator of the NFT itself. In summary, the more bids an NFT auction receives, the higher the value of the NFT until it is sold.
If you are preparing to launch your NFT and you think you will sell it, you should consider an auction.
- First, using an auction eliminates peelers and short-term fins. Since the auction price is determined by the market, there is no profit to be made in the short run. Fans and long-term investors will be able to earn their NFT from the first sale.
- Users will place their bids for a certain period of time and the highest selling price will be the losing bid. This prevents users from overpaying – bidders pay exactly the amount they need to bid to win and then allows people to bid their estimated value.
- The selling price will be determined at the end of the auction. The winning bidders will be given their NFT and the bid amount in excess of the selling price will be refunded. Losing bidders will be refunded.
How is an NFT auctioned in the AirNFTs NFT market?
The process of putting an NFT up for auction begins with the creation of the NFT. Learn how to build and sell your own NFT in our previous article.
Once you’ve created your NFT, follow these steps to put it up for auction on our NFT marketplace:
1. Tap the profile picture and then “my NFTs,”
2. Go to your collection and click on the NFT you want to auction,
3. Change your NFT price to match the final price you would like to get if the auction has bidders to avoid frontal attacks – we’ll explain this later in this article,
3. Click the more icons and click “Start Timed Auction,”
4. Specify the Minimum Bid and the duration of the auction, then click “To approve“
5. A smart contract call pops up, “To approve”
6. Wait a few seconds for confirmation and you will receive a notification at the top of your screen that the auction has been successfully created.
And there you go, your first NFT is auctioned on the AirNFTs NFT market.
Note: If the NFT you want to auction has a low initial price when you send it to the escrow account, someone can buy it within 5 seconds before the escrow account locks it up. On the other hand, if the price of NFT had been higher earlier, that lead run (attack) could have been avoided.
I hope you have learned that using auctions to sell your NFTs will work great for you and your users. If you’re working on an NFT project and planning to launch it, we recommend saving your time and doing it from AirNFTs, an NFT marketplace running on both Polygon and BSC blockchains for low or near zero gas/network fees. .
Check out our previous article to learn more about where you can print and buy your NFTs with low gas fees.