NFT Auction Portal Development: How to Create Your Own NFT Auction Platform?

Non-Fungible Tokens are spreading like a wildfire that they are taking over every industry on the planet from digital art to event ticketing. The sales volume of NFTs was unbelievably huge and it reached 40 billion USD in 2021. This will not even close to the total NFT sales volume since its introduction. Draper, the popular blockchain and crypto-based venture Dapp Rader published a report that the market capitalization of NFTs is showing no signs of slowing down making it unshakable.

NFT trade through Auctions is one reason that contributed significantly to the sales volume. NFT auction Portals have become the most common online platform these days. In this blog, you will be reading everything about auctions, NFT auction portal development, and how it is contributing to the sales of NFTs.

Diving into Auctions

From the times of Kings and kingdoms, till a few decades before, and even now, Auctions are still running everywhere. This selling technique is not just benefiting the seller, it also benefits the buyer to a great extent. Auctions have become a fundamental part of our economy and our society that everything from rare artifacts to a million-dollar venture is sold through auctions.

So everything can be auctioned off? Then why do people sell directly fixing a price when they have a chance of getting more from the auction? Auctions are taken up when,

- The item is unique, rare, and one of its kind

- Incomplete information on how it should be priced or valued

- The buyer community is diverse and fragmented and the estimated price that the market is willing to pay is not known

In the above-mentioned situations, Auctions can take place to get the best out of it. Not to mention, the above-mentioned categories matched the Non-Fungible Tokens.

Non-Fungible Tokens are unique, minted on the emerging blockchain network, and have a diverse and fragmented buyer community globally. Though NFTs are also sold at a fixed buying price during their launch, it is mostly auctioned in the secondary sale. Many unique and popular NFTs are auctioned off and created records. The Bluechip NFTs are always sold through auctions which brought a number of NFT auction portals into the market.

Not just that it has even created an opportunity for the entrepreneurs to launch the NFT auction portal helping them to enter this lucrative industry.

Fundamental Elements of an Auction

With time, auctions evolved and changed as per their needs. Be it the way how buyers bid or how long the auction last, everything can be chosen as per the needs. Some common elements that make an auction fair are given below.

• Reserve price- A minimum price above which the buyers should place their bids and the buying price should not fall below it.
• Controlled time frame- The auctions can’t take place indefinitely, so there must be a time frame where the auction should stop at a point. The auction should end when a buyer agrees to a price or when no buyer to ready to place a bid even when after the set time frame.
• Type of bidding- open bid where the buyers can look after the bidding history and sealed bid where the bid price is hidden.
• Auction platform- Auctions were held by auctioneers previously but today online platforms are giving a better environment for a controlled and fair auction.

Different Methods of Auctions

• Ascending or Descending- The Price is increased until only one bidder remains in the auction with the highest bid in an ascending auction. The price is lowered until the first bidder accepts the existing or reduced price in descending auction. These are named English and Dutch auctions respectively.
• First price or second price- In a first-price auction, the winning bidder pays exactly the amount of the bid. In a second-price auction, the winning bidder need not pay the amount he bids instead he pays the next highest bid.
• Open Bid / Sealed bid auction- Auctions can also differ in the amount of information that is made available to bidders. Open bid auction, bidders can see the bidding history and can decide whether to exceed the existing bid. In a Sealed bid auction, bidders all submit their bids within a given time and without knowing the prices submitted by competing bidders.

How do NFT Auctions Work?

A reserve price is the smallest amount of cryptocurrency fixed on an NFT. Collectors will see the reserve price on the auction portal or marketplace and will not be able to bid below this fixed price.

Along with the reserve price, there is a 15% service fee that will be added to the final sale price of the NFT, so it is necessary to take that into account while setting the reserve price.

In most of the common NFT marketplaces, when an NFT’s reserve price is reached, a 24-hour countdown begins, and the auction ends automatically. This is to limit the auction under a controlled time frame.

The bidders can place bids either equal to or greater than the reserve price or the base price fixed. The first bid is placed, and a 24-hour timed auction will begin. All subsequent bids must be at least 10% or 0.1 ETH or whatever cryptocurrency is in use that is higher than the current bid. If the NFT receives no other bids after a collector places a bid at the reserve price, the object is sold to the first bidder at the reserve price itself.

When the bidding for the auction is about to end, for every bid placed in the final 15 minutes of the countdown, the countdown timer will be reset to 15 minutes until no more bids are placed. The addition of 15-minute extensions gives each buyer one final chance to bid, as well as the NFT to receive the price it deserves.

NFT Marketplaces — The Emerging Art Auctioneers

Everything is getting digitized and NFTs are giving the fuel to every industry to take that up. Non-Fungible Tokens are emerging as a way to digitize art, give them exclusive ownership right on the blockchain, and of course monetize them efficiently. This started a revolution for NFT marketplace development and the year 2021 is the onset of it.

Many NFT marketplace emerged as an NFT auction portal and facilitated sales and trade of many blue-chip NFT collections. Many artists marked their success in this field at their first few attempts and Beeple- the digital artist is one among them.

Upshot

NFTs are paving the way for a new tech that gives better security to the assets. People are interested in even seeing the bidding wars and chats happening on these auction portals. Many leading marketplaces like Opensea, Nift Gateway, etc are emerging as an example to lead the industry.

NFT auction Portal development is also getting its way towards the front making a demand. Blockchain and NFTs will be unimaginably exclusive techs that will create a new era very soon.