9 Terms Every NFT Collector Should Know
Are you exploring the world of NFTs? Below are 9 market terms that will help you explore this dynamic world of NFTs.
1:1
Pronounced “one of one” and sometimes spelled 1/1, a 1:1 is an NFT that has been issued as a one-time, exclusive edition. This property is written in the work code and is immutable once added to the blockchain. 1:1s are the NFT equivalent of a painting, are generally owned by a single person and are a format reserved for “masterpieces”. Placing a 1:1 with a notable collector, institution or fund in the NFT world is just as important as with works in the traditional art world.
The two most expensive NFT sales to date, Beeple's Everyday's: The First 5000 Days (a mosaic of 5,000 digital drawings sold at Christie's for $69.3 million in 2021) and Julian Assange and Pak's Clock (a relógio which shows the number of days Assange spent in prison which sold for $52.7 million in 2022), are both 1:1.
airdrop
Airdrops are free NFTs sent to the web3 wallets of collectible NFT holders. Air-dropped NFTs are less valuable than the original NFT collectibles, although they can still be quite valuable. The collectible Bored Ape Yacht Club airdrops a derivative of the original NFT called the Mutant Ape Yacht Club, for 10,000 people to spot it, and collectors pay up to $835,000 for a single. That, however, is still far less than the top-selling Bored Ape, at $3.5 million.Airdrops sometimes feature work by emerging artists as a way to gain exposure. Other times, it could be Valentine's Day cards or drawn holidays. Many airdrops are on layer 2 blockchains such as Polygon (Etherium is a layer 1) as transaction costs on these chains are much cheaper. Artists doing 1:1s, small edits or generative art (definition below) generally should not provide airdrops to their collectors.
alpha
Although the term comes from finance – where it is used to compare portfolio returns against a market index – in the NFT space, the meaning is closer to “intel”. Alpha is the information given or obtained by a select group of people ahead of the majority of the NFT market. Speculative collectors sometimes form alpha groups to exchange information about an artist or collectibles that may affect their value. For example, an artist can share details about upcoming releases, partnerships or exhibitions with their most loyal customers as a reward for their support.
Burn/Burning
Burning is the equivalent of erasing your NFT. Burning is usually done to reduce an artist's supply and increase their demand and, by extension, the price of works. So, burning happens when a collector transfers his NFT to a non-existent wallet. Many NFT platforms have a recording function in case it is needed. Sometimes an artist can give you their wallet address to send the NFT and they will take care of the Burning. There are other examples as well, such as a collector acquiring three NFTs from an artist and then burning them all to get a higher value NFT from the artist.
Collectibles or PFP
Collectibles are large NFT collections, usually 10,000 in size. They are also called PFPs (short for “profile picture”) because their owners often use the collectibles as their profile picture on social media (usually Twitter). Each NFT in a collectible is a unique variation of a figure, that is, they will have different characteristics (laser beam eyes, rainbow skin, green mohawks, etc.) with different rarities. Some features are extremely rare - for example, only eight out of 10,000 CryptoPunks have beanies - others less so. Despite their massive issue size, collectibles are the top-selling NFTs in the space. Seven of the top 10 most expensive NFT sales are CryptoPunks, the original top 10,000 collectibles, with the most expensive selling for $23.7 million.
Collectibles differ from NTFs in that they often function as membership cards, granting their holders access to special websites, opportunities, parties, or future NFT releases. This aspect of an NFT is called utility. Other forms of utility include licensing rights to a holder's individual NFT and the ability to vote on community decisions, such as which art is purchased for a collectible fund or which non-profit organization donates money to.
Collectibles are usually executed by a team of people, as opposed to a single artist. Successful collectibles such as Doodles, Bored Ape Yacht Club, CryptoPunks, Cool Cats or World of Women often become major global brands. Yuga Labs, creators of Bored Ape Yacht Club, is a company that manages and produces collectibles – and the success of Bored Ape Yacht Club has allowed them to acquire other collectibles (CryptoPunks and Meebits) from Larva Labs, the main competitor .
generative art
Generative art refers to NFTs created with a randomization algorithm or AI. Predetermined rarities are usually built into the algorithm so that certain resources are more or less likely to appear than others. Generative art can take the form of 1:1 moving or dynamic or large edits of hundreds or thousands of permutations of still images. Collectibles like CryptoPunks or Bored Ape Yacht Club are technically generative as they are made with a randomization algorithm. However, they are not usually called generative art, as their usefulness prevents people from seeing them as purely “art”. ix.shells and Sofia Crespo are well known for making 1:1 generative art. The ArtBlocks platform is known for its generative art edits, partnering with artists such as Tyler Hobbs, Dmitri Chernick, and Jen Stark, among many others. The size of these edits tends to be between 200 and 2,000. Ringers #109 from Chernick's generative art collection on ArtBlocks sold for $7.1 million, making it the 11th most expensive NFT.
mint
Mint is to add a work of art to the blockchain whereby it officially becomes an NFT. Artists who do 1:1s or small collections generally mint their own work, covering any associated fees. However, when it comes to edits in the hundreds or thousands, it is generally forbidden for the “Mint” creator to all his own NFTs. This is also true for open editions, which have no predetermined size limit, but generally limit “mint” to a period of 24 to 72 hours. In such cases, buyers will cover the fees. Mint is especially exciting when it comes to generative art edits or PFPs, because the buyer doesn't know which permutation they'll get. It's like buying a deck of Pokemon cards; inside may be a very rare first edition Charizard, but you won't know it until you unwrap it.
Metadata
Metadata is the key data that describes an NFT. For many works, this is simply the artist's name along with the title, date, and description of the work. However, for collectibles and some generative arts, Metadata are very important because they include the characteristics of the NFT along with its rarity. Most collectibles will not have more than 12 traits listed in the Metadata. Bored Ape Yacht Club and CrytoPunks have no more than seven traits per NFT. CryptoPunk #2624, for example, has “Cigarette” (10%), “Earring” (25%), “Wild White Hair” (1%) and “Female” (38%). Metadata is easily viewed on platforms like OpenSea and for collectibles is as essential to the NFT and its value as the image itself.
sweeping the floor
Sweeping the floor is the act of buying all minimum price NFTs in a collection. Minimum price is the lowest price that an NFT in a collection can be purchased. Floor prices are determined by two main factors: the state of the cryptocurrency market and the momentum of an artist or collection. The first causes minimum prices to fluctuate a lot. It is not uncommon for a minimum price to double over the course of a month or two and then drop back to its original price or lower. On OpenSea, the minimum price is published at the top of the page, along with the total volume, the number of NFTs in the collection and the number of current owners.
Sweeping floors is done by collectors and the creator(s) of a collection. Collectors will sometimes have alerts that let them know when a minimum price has dropped below a certain threshold, as well as sniper bots that sweep the floor at that price. When creators sweep their own floors, it's usually a form of market manipulation, designed to inflate the overall value of their collection.