If you have done trading on NFT marketplaces then you know that they primarily use auctions. Instead of having fixed prices, auctions allow buyers to compete with each other for NFTs.
Whether you’re an NFT trader or an artist, understanding how NFT auctions work is an important way to succeed in this industry. In this article, I will be explaining what NFT auctions are and how to bid. So without further ado, let’s jump right in.
What are NFT auctions?
An NFT auction is a process of trading NFTs by offering them up for bids. Sellers set the time of the auction and the minimum bid price. Buyers then place their requests for purchase. At the end of the auction, the NFT is sold to the highest bidder.
How do NFT auctions work
NFT auctions usually work in one of two ways. The English auction or the Dutch auction. Firstly, in an English auction, a minimum price is set and then buyers bid up the price. On the other hand, in a Dutch auction, an initial price is fixed and then declines to a set price over a specified time period.
Both of these auctions have a reserve price. This is the minimum price that can be accepted. If there are no bids equal to or greater than the reserve price, the auction will end without a sale.
How to bid on an NFT
In this section, I will be taking you through the process of bidding on OpenSea:
1. Connect your wallet to the NFT marketplace.
2. Browse the platform to find the NFT collection you’re looking for. You can also filter the status for “on auction”.
3. Make an offer
4. Choose the token of choice. Then set the offer amount and expiration date.
5. Sign the transaction.
Which NFT marketplaces support auctions?
Now that you know the basics of NFT auctions, let’s discuss which platforms support them. Essentially, auctions are supported on any of the major marketplaces. This includes:
OpenSea – this is the most popular NFT marketplace and for a good reason. Founded in 2017 by Devin Finzer and Alex Atallah, OpenSea has a proven track record. The design is intuitive and supports more than 150 different payments. Setting up an account is free and it supports several wallets including Metamask and Coinbase.
Magic Eden – this is the second largest NFT platform with over 20 million unique user sessions per month. One of the main benefits of Magic Eden is the transaction fees. It is only 2% compared to Open Sea’s 2.5%. The platform also has a launchpad that facilitates the auction process. Sellers can apply to the launchpad and get their project listed. Users can trade with both Solana and Ethereum. If you want to learn about the top 5 NFT marketplaces. Click here.
Final thoughts
Overall, auctions are a great way for setting the price of NFTs. They are ultimately determined by competition between buyers. This can be beneficial to sellers who don’t know what price to set. On the flip side, this process can also be great for buyers. If you are on the lookout then you can find some fantastic deals. I hope you found this article useful and thanks for reading.
Want to learn how to authenticate NFTs? Click here.
