In the last two years, NFTs have taken the world by storm, with tons of auctions taking place. It is estimated that NFT sales are expected to reach $80 billion in the next three years. The most common method of making sales with NFT art is setting a price for a certain amount of NFTs. After the sale concludes, secondary markets start to explode, and flippers and collectors all come into action. But one thing is certain- the prices can vary from as little as two times to as high as twenty times the original.
If you have some art lying around and are wondering how to sell it- try an auction. Unless your art will take time to sell or doesn’t have mass appeal, you should consider auctions to start your profit journey. Let’s dig into the details of how auctions work.
What is an NFT Auction?
Some NFT collections provide a pre-sale and a public sale, while other NFT artists or projects hold digital collectibles auctions. Normally, auctioned NFTs are one-of-a-kind works by the artist. Some of the revenue funds the project and its community.
NFT auctions may occur online via centralized or decentralized platforms or on in-person platforms at reputable auction houses like Sotheby’s.
An NFT auction is a transaction where the seller specifies a minimum price with a time limit for sale. The procedure is simple and straightforward and can be found on secondary marketplaces like OpenSea as well.
People interested in bidding may do so within the stipulated period once posted. Within that time, the item is handed to the highest bidder. Bids are often placed depending on the artistic appeal and how much the buyer is prepared to pay for the NFT.
How do Auctions take Place?
An auction is a sale in which the seller sets a minimum price with a time limit for the transaction. Buyers may bid on the NFT given their offers are higher than the minimum price. Once the time is up, the NFT is sold to the highest bidder.
You will have successfully bid on the NFT once your bid transaction is verified on the blockchain. The NFT will be yours if no higher bids are put before the auction concludes.
Because the nature of the transaction is an auction, you may be outbid before the auction is completed. Before the auction ends, make sure you’re still the winning bidder by checking back periodically.
Make sure to check the website once the auction has ended to see the auction status. You must claim your NFT if you win the auction. The money will be sent to the seller, and the NFT will be deposited in your wallet.
Why is it a Good Idea to use Auctions to sell NFTs?
NFT auctions are global events with participants from all over the world. As a result, this auction-style method ensures that all potential bidders have a fair chance. For collectors, this means that their investment will be protected if the reserve price is met.
Scalpers and short-term flippers are eliminated with this format. There is no profit to be made in the short term as the market establishes the auction price. From the initial sale, fans and long-term investors will be able to win the NFT art.
NFTs should ideally be auctioned using the Vickery rules for the selling price. Users submit their bids over a period of time, with the highest losing offer being the selling price paid by the winner. This prevents customers from overpaying – people bid the precise amount they would offer to win — and enables people to bid their true worth.
It’s critical to accept the offered cryptocurrency; otherwise, the auction might have an inflated selling price due to tampering by fake bidders.
The selling price is determined at the end of the bidding process. Winning bidders get their NFTs, with any excess above the selling price repaid. Bidders who lost would get their money back. It’s also possible that successful bidders will be able to purchase many NFTs at the selling price, given there is more than one on auction.
The fact that consumers would pay a greater fee is one criticism of the auction model. The price indeed goes up. On the other hand, the settled auction price would be quite similar to the current secondary market price. Scalpers would have nothing to benefit from the arbitrage if this were the case.
Scalpers may attempt to get in early with low prices, but successful bidders are true fans and long-term investors who end up purchasing NFTs on secondary markets anyway. The proceeds of the auction go towards rewarding NFT holders with additional content, perks in future NFT drops, or giveaways.
What is an NFT Auction Site or Marketplace?
An NFT marketplace or auction site is your entry to purchasing or selling NFT art. It is like the Amazon of the digital world. Due to the popularity of NFTs, there are plenty of NFT marketplaces or auction sites, each with its own niche. Here are a few marketplaces and auctions sites for you to sink your teeth into:
OpenSea is a market leader in terms of sales. OpenSea offers a wide range of digital materials on its platform. Signing up and browsing the broad choices is entirely free. It also helps creators and artists by providing a simple approach for creating your own NFT, also referred to as minting.
OpenSea supports over 150 different payment tokens and is a great place to start if you’re new to the NFT realm.
Axie Marketplace is the NFT store for the video game Axie Infinity. Axies are legendary creatures that can be purchased and trained before being pitted against the Axies of other players for rewards. Players can purchase new Axies, entire lands, and other items as NFTs for use in the game.
Axie Infinity tokens used the Ethereum blockchain, also commonly known to Axie enthusiasts as Axie Shards. As a result, the tokens are available for purchase and sale on several other NFT markets and cryptocurrency exchanges like Coinbase.
Rarible, like OpenSea, is a vast marketplace that is home to all kinds of NFTs. You can produce, buy, or sell all sorts of NFTs. But, unlike OpenSea, you’ll have to purchase and sell using the marketplace’s token, Rarible.
The firm has teamed with several renowned business brands. Taco Bell posted an NFT on Rarible, and Adobe, a cloud software giant, joined Rarible to help safeguard the work of NFT artists and creators.
Foundation was created as a straightforward and hassle-free method of bidding on digital art. The platform uses Ethereum for sales. Since its inception last year, the marketplace has sold more than $100 million worth of NFTs.
The Foundation community is open to new artists, and buyers can get started with an Ethereum-funded crypto wallet. Despite the ease and sophistication, Foundation isn’t the ideal place to start if you’re looking for a fast and easy method to start minting NFTs, but it offers lots of artwork that can be viewed in a simple format.
Mintable is funded by billionaire Mark Cuban, who wishes to create a marketplace that competes with OpenSea. This platform also uses Ethereum as currency. Mintable allows artists to mint NFTs to market their work.
An ambitious NFT creator or collector must first acquire Ethereum and then link their wallet to Mintable to participate in bidding and purchasing activities on the marketplace.
The Biggest NFT Auctions
To give you a better perspective on NFTs and how far they have come, let’s look at five of the biggest NFT auctions to date.
1. Everydays: The First 5000 Days by Beeple – 38,525 ETH ($69,346,250)
2. Clock – 16,953 ETH ($52,700,000)
3. Human One by Beeple – 4,700 ETH ($28,985,000)
4. Cryptopunk #5822 – 8,000 ETH ($23,700,000)
5. Cryptopunk #7523 – 4,700 ETH ($11,754,000)
If you were unsure about NFT auctions before, you now understand how they work, why they are so important in this day and age, and how to sell your NFTs at auctions. Hopefully, this blog will help you get started on your NFT auction journey. If you have something to add to this blog, feel free to comment below!