October 11, 2022
The NFT Degen Dictionary
If you're a n00b in the NFT space, here are some common terms you'll want to know.
Alpha - inside information about upcoming announcements or news likely to influence the price of NFTs. Access to alpha is usually reserved for those in direct contact or close proximity to the project's team and can be used to trade NFTs in a financially beneficial way.
Ape in - to go all in on purchasing an NFT or NFTs from a particular collection, often irresponsibly and for illogical reasons. E.g. “I’m APING IN on this new PFP collection and I don’t even know why!”
Blue-chip projects - these are NFT projects that have demonstrated high and stable market value over time. Notable examples include Bored Ape Yacht Club and Cryptopunks.
DAO - a decentralized automated organization. DAOs are organizations governed by several smart contracts with no centralized hierarchy or leadership structure. Members can submit new proposals and vote on proposals. Membership to DAOs is often granted by holding a specific NFT / fungible token.
Degen - short for “degenerate,” the term refers to a gambler who plays with high stakes without fully understanding what they’re investing in or having adequate experience, thus introducing a high level of unnecessary risk. In the NFT space, the term has become an ironic badge of pride for many users. E.g. “GM fellow degens! I just lost $40,000 on my Bored Orangutan lol YOLO.”
Doxxed - originates from the term "doxxing," which means to reveal someone's name, address, and other personal details online, usually with malicious intent. However, in the NFT world, when project founders are "doxxed," there is a positive connotation. This doesn't mean they necessarily reveal their personal address to the community, but rather that they publicize their identities to instill trust in the community that they are real people and not scammers. Bonus points if they are experienced and respected web3 veterans who have previously launched successful projects in the space!
Floor price - the price of the least expensive NFT in a given collection. For example, if you want to acquire BAYC NFT, and the floor price is 100 ETH, this means the cheapest Bored Ape you could acquire (and thus become a BAYC holder) would cost you 100 ETH.
FOMO - the "fear of missing out" refers to the tendency of some people to buy something because they feel like they will be left out or miss an opportunity if they don't. This motivation for making a purchase often results in disappointment, as it is a purely emotional driver and thus should not be considered a reliable indicator of whether a purchase is worthwhile.
FUD - "fear, uncertainty, doubt" refers to feelings of distrust in the estimated, continued, or future value of a project or NFT. Competitors may spread FUD to discourage potential investors from buying NFTs from rival creators, or FUD may arise organically on the Internet around a project if lingering suspicions of a "rug" (see "rug pull" below) begin to fester.
Gas fees - transaction fees used to pay for operations on the blockchain. Every “write” operation on the blockchain incurs gas fees (i.e. minting NFTs, sending crypto or NFTs, deploying smart contracts, etc.). “Read” operations generally do not incur gas fees (i.e. checking your wallet’s balance, getting a contract address, etc.).
Intellectual property (IP) - as it relates to NFTs and the blockchain, IP is intangible property that is the result of creativity, such as images, audio files, videos, etc. and the associated rights to use, copy, distribute, or modify such works in various ways.
IPFS - the InterPlanetary File System is a file sharing peer-to-peer network for storing and sharing data in a distributed file system. It is the most common system for storing NFT metadata (see "metadata" below). Because IPFS is distributed, files do not merely exist in a single location on the network, and thus are more likely to persist over time, as they are less susceptible to tampering or being lost inadvertently.
License - a document specifying the terms of what intellectual property rights are licensed to holders of an NFT from the creators. Without any such document in place, the terms transferred are often murky, ambiguous, and subject to legal dispute.
For more on why you might want to use an NFT license, check out this article.
Metadata - the information included in an NFT through an embedded IPFS hash that associate digital images, videos, audio files, and/or traits with the given NFT. It is important to note that most NFTs do not inherently contain the images they represent, but rather link to where this metadata is stored online (usually on IPFS).
Mint - creating an NFT from a smart contract. During minting, either the buyer or the owner of the smart contract must pay for gas fees to mint the NFT.
NFT - a non-fungible token. “Non-fungible” means that each NFT is one-of-a-kind and is not interchangeable with other NFTs. Each NFT minted from a given smart contract has a different “token ID” that serves as the unique identifying number for the token itself.
NFT collection - can refer to two things:
- A group of NFTs minted from a single smart contract, all sharing the same contract address but each with different token IDs.
- A group of NFTs on OpenSea that do not share a contract address.
For more on the differences between OpenSea collections and NFT collections from their own smart contracts, check out our article on the topic.
Open Edition (OE) – An NFT drop with no supply limit allowing collectors to mint as many NFTs as they want within a certain period of time.
Private key - a series of numbers and letters that give access to assets at a specific blockchain address. Private keys are also used to sign transactions (i.e. to allow gas fees to be paid from a given address in order to enable a given transaction like minting or transferring tokens)
Royalties - a percentage of each sale and resale of an NFT that is paid back to the original creators.
Rug pull (or "rug") - an NFT project that goes all out with their marketing campaigns in order to sell out their primary mint and promises a long-term, ambitious roadmap to attract potential investors. Once the collection sells out, the team and founders become inactive and/or disappear on socials, leaving buyers with a rapidly decreasing asset.
Smart contract - an executable program on the blockchain. Some smart contracts are used to create tokens like NFTs. In this case, the smart contract serves as both the “blueprint” and “factory” for creating NFTs. It defines their properties and is also the mechanism which creates (“mints”) the NFTs. Once deployed on the blockchain, smart contracts cannot be changed.
Utility - useful functionality or access to exclusive benefits granted to holders of NFTs in a given collection. Examples of NFT utility include: members only online areas, access to IRL events, receiving new NFTs via airdrops, participation in DAOs, etc.
Web3 wallets - used to store digital assets like cryptocurrencies and NFTs and connect to web3 applications. You’ll need a wallet to pay for the gas fees to mint NFTs from most NFT minting sites and to store the NFTs you purchase. MetaMask is one of the most popular wallets for Ethereum.
For a list of the wallets we can implement into your project, check our blog post on the topic.
October 11, 2022