Intro to NFTs on Solana
Introduction to NFTs
What even is an “NFT”?
NFT stands for “non-fungible token”. In plain English, it’s a one-of-a-kind digital asset.
When you own an NFT, you can choose to store it because you’re a long-term investor or simply because you love the art. You can also sell it and turn a profit. For artists, NFTs allow them to enjoy creator royalties. On Magic Eden, each time an NFT sells and passes hands, the creator benefits from the preset royalties that they had agreed to. Use cases for NFTs are plentiful and are being explored in the field of games, music, real estate and more!
A prominent use case for NFTs is that it establishes proof of ownership for digital art, which opens up new avenues for artists.
Safety Note:
NFTs are a whole lot of fun but you should be aware that they can fluctuate in value and are a highly volatile asset class. Please do your own research (DYOR) before you decide to invest in NFTs.
What is proof of ownership?
On a blockchain, you can track who owns an NFT. If you owned an NFT, the whole world would know that your NFT belongs to your specific wallet address, and no one can dispute your claim of ownership. Anyone can download an image of the Mona Lisa on Google Images but not everyone can own the Mona Lisa. This is the strength of digital ownership.
Why Solana?
You might have heard that the best place to buy NFTs are on Ethereum. When you buy an NFT on Ethereum, you need to pay gas fees in order for your transaction to be processed. Ethereum gas fees can easily cost more than the NFT you wish to mint or buy. On Solana, transaction fees are a fraction of a cent. And, it’s lightning fast! Not to mention, the environmental cost of 1 transaction on Solana is less than 2 Google searches.
For more information on Solana’s energy use, check out this report.
What happens when I mint or buy an NFT from secondary?
Unlike buying an NFT from a secondary market like Magic Eden where NFTs are listed post-mint, minting an NFT is buying directly from the “supplier” (primary market) who are the creators of the NFT collection. When an NFT is minted, it is stored on the blockchain.
You can mint NFTs directly on Magic Eden’s Launchpad or on the NFT collection’s official website. You cannot choose which NFT to mint, as it usually operates like a lucky draw. If a collection is minting for, as an example 1 $SOL , you have equal chances of ending up with a legendary-tier NFT or a common-tier NFT. Both for the same price! If you mint an NFT, you may be able to purchase the NFT at a lower price than you would on a secondary market.
Buying NFTs on Magic Eden means you are buying from the secondary market. The current holders of the NFTs set the price for each NFT they are selling. The good thing about buying on secondary is that you can choose which NFT you are getting!
Wallet
What’s a wallet?
We all know what banks manage, store and track your financial funds. A wallet is like a bank except you are the bank. You’re in charge of your funds. With that comes great responsibility but, have no fear, we cover how you can stay safe.
A wallet is also a form of identification throughout the Web3 space. Whatever you do in this space will involve your wallet. It’s your passport to all things web3. Your wallet is your access point to everything to do with NFTs: it is where you exchange tokens, purchase NFTs, and store these assets.
What types of wallets are out there?
There are many different types of Solana wallets. On Magic Eden, you can connect to a variety of wallets. For beginners, we recommend Phantom wallet. These wallets are typically available as a browser extension and/or phone app, which you can easily connect to Magic Eden. With $SOL in your wallet, you’ll be able to buy NFTs.
How do I set up a Phantom wallet?
More information can be found here
Safety Note:
When signing up for a new wallet, you’ll be given 12 words known as your “Secret Recovery Phrase”. This is your private key and you can think of it as your password. These words are what you will use to recover your wallet if you need to log into a new device.
How do I get $SOL?
You can buy $SOL through crypto exchanges. On a crypto exchange, you’ll buy cryptocurrency in fiat. Here’s how to transfer $SOL from Binance to your Solana wallet.
If you’re using crypto.com, here’s how to transfer $SOL.
I want my crypto to be well-protected. How do I practice wallet safety?
Keep your seed phrase/private key to yourself. Do not give out your seed phrase (a.k.a secret recovery phrase). You should be the only person to know it. If anyone else has your seed phrase, they will have access to your wallet and can drain your funds.
Safety Note:
NFTs are a whole lot of fun but you should be aware that they can fluctuate in value and are a highly volatile asset class. Please do your own research (DYOR) before you decide to invest in NFTs.
Use a burner wallet when minting on a platform other than Launchpad: Some sites can be shady and will attempt to steal your funds when you connect your wallet to them. By using a burner wallet, you’re limiting your risk of exposure.
Here’s how to use a burner wallet:
- Within a single crypto wallet, you can have many different wallets that use the same recovery phrase/private key. When minting NFTs, it is best practice to use a burner wallet, which is a temporary wallet used only to mint. By using a burner wallet, you’re limiting your risk of exposure to shady websites that attempt to steal your funds when your wallet is connected to them.
- Once you’ve created your burner wallet within your main wallet, pre-fund your burner wallet with the exact amount of $SOL you require for minting. After minting, transfer your newly minted NFTs to your main wallet.
Check the URL: Always check the URL of any sites you visit to make sure it is the official link. Bookmark the sites that you regularly visit. Phishing websites pose as the real website but are identical fake sites attempting to steal your private information.
Get a hardware wallet: Consider getting a hardware wallet for an increased level of security. A hardware wallet can keep yo
ur cryptocurrency funds safe even if the computer you’re using isn’t secure. Hardware wallets protect your private keys and they let you sign and confirm transactions on the Solana blockchain.
Buying NFTs
How do I mint an NFT collection?
The first and safest way is to use an existing launchpad like Magic Eden’s Launchpad. We employ safeguards like doxxing the founders, holding funds in escrow, and evaluating a collection’s legitimacy before helping them launch!
Here’s how you can use Magic Eden’s Launchpad:
- Hop on to our launchpad site here.
- Connect your wallet to Magic Eden.
- Wait for the public mint or presale mint to start.
- Once the countdown is over, MINT AWAY!
Note: Launchpad mints often are high-traffic mints which means that you’re competing for a chance to mint with a lot of people. Don’t be discouraged if you’re unable to mint. There’s always next time!
The second way to mint is by minting on the NFT collection’s own official website. Join the NFT collection’s Discord server for more information.
How do I choose which NFT is for me?
You’ll want to DYOR. Ideally, you will assess the project’s long-term strength which involves the core idea, the strength of its offering and whether the team will be able to deliver. But, you can always buy an NFT without doing any research. How degen of you! For those that want to do some research, here’s some questions to get you started:
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Do you like the art?
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What is the value proposition of a project? Are they doing something that is unique?
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Has the team launched NFT collections in the past? Are they a reliable and trustworthy team that you believe will deliver on their promises?
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Is the community active and involved? Is it a community you want to be part of? The strength of an NFT collection is also reliant on its community.
How do I buy an NFT on Magic Eden?
How do I stay safe while minting and buying NFTs?
Many individuals and projects are genuine but there are bad actors who rug or create cash grabs. But, you don’t have to fall prey to them.
Here are potential red flags to look out for:
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Be wary of accounts that have gathered massive amounts of followers in a span of a few days or weeks. However, this could also be a huge testament to the NFT collection itself. For example, they have great utility or huge hype behind a trustworthy team.
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Is the team doxxed? If not, are they transparent? Doxxing does not guarantee immunity from rugs but a team’s genuinity will set them apart. If the team is doxxed, whatever social media accounts they have shouldn’t have been created yesterday.
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Is the art theirs or is it stolen? Did they get some random Fiverr artist to do it? What’s key here is how much time they’ve dedicated to building their NFT project. How much effort have they put in.
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Is the purpose of their NFT project clear? Copy pasta projects aren’t just lacking in creativity, they can easily be repurposed and may be a red flag since there’s a lack of innovation.
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Do they use bots for their Twitter and Discord? Fake engagement is a big red flag.
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Is it too good to be true? Are they making ridiculous promises? You gotta ask, where’s the money coming from?
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If you or others get banned for asking simple questions or wanting to find out more… That's a big red flag.
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Are they paying for their marketing or is it organic? There’s nothing wrong with paying for marketing but if that’s all they do, that’s a giant red flag.
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Is there a high mint price? For example, anything above 2 $SOL should be questioned. This can be justified if they’re delivering a high quality and unique NFT collection. If not, it’s likely a cash grab.
Selling NFTs
How do I sell NFTs on Magic Eden?
People can also send in offers for the NFTs you have listed. If you’ve changed your mind on listing, cancel the listing by clicking cancel listing and approve the transaction. It’s that simple!
Safety Note:
Make sure you check the URL is ‘magiceden.io’ before you connect your wallet.
Will I be able to sell an NFT immediately?
An NFT is an illiquid asset, which means that to see any real returns, you need to realize your gains by selling the NFT. There needs to be demand in order to sell an NFT. A quick way to see if an NFT collection has demand is by checking the transaction activity of the collection! The more activity here, the higher the likelihood of your NFT being sold.
Keep an eye on the prices at which the NFTs are being purchased! If people are purchasing at the floor price and you list your NFT for 10 times higher, the chances of it being bought are significantly lower.
What is the floor price?
The floor price can be found on the page of every collection on Magic Eden. It is the minimum price a collection’s NFTs are being sold for! It shows how the NFT holders are valuing them. A higher floor price usually indicates a higher valuation.
What are attributes and why are they important?
Within a collection, NFTs have different attributes that make each NFT unique. Whether that is how the mouth looks, the body, or even the background, the variety helps to add value to an NFT collection through rarity.
An NFT’s rarity is determined by the likelihood of its unique combination of attributes. So, if an NFT has purple sunglasses, and the purple sunglasses are only present 0.01% of the time across the collection, this can potentially make the NFT more valuable! On Magic Eden, you can see the rarity rank of an NFT on their collection page.
Now that I’ve bought and sold an NFT, what do I do?
Congratulations and welcome! You’re now a part of the NFT community. Trading NFTs isn’t solely about having an appreciating digital asset, it’s also an opportunity to build and be part of a community.
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Start by interacting on Twitter and Discord. Twitter is the place where the larger NFT community hangs out. It’s your neighborhood. Discord is your house. It’s where specific NFT communities gather.
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Spend time on Discord, get on the general chat channel, chat with other holders and have fun while you’re at it! Maybe make a friend or two?
- Ask questions and as you gain footing in the NFT space, interact with newbies seeking guidance and answer their questions. Seek to provide value.
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When you’re ready to contribute to strengthening the NFT project, think about what you can offer that is unique to you — what are you good at?
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