NFT Vocabulary: A Glossary of NFT Terms That Actually Matter

An NFT (non-fungible token) is a blockchain record that gives one specific item its own token ID inside a smart contract, and the chain keeps a public record of which address owns it. Most NFT terms describe one of three things. Some describe how that record works: token standards, metadata, gas. Some describe how the records are traded: mint, floor price, royalties. The rest are community slang. This glossary defines each group and points to the primary document behind the technical terms. It also covers the terms that matter most for safety, approvals and phishing, because that is where collectors lose assets.

How an NFT works

Fungible vs non-fungible

A fungible asset is interchangeable: any one ETH equals any other ETH. A non-fungible asset is not. The Ethereum standard ERC-721 says NFTs "are distinguishable and you must track the ownership of each one separately." Each NFT has a uint256 token ID that does not change for the life of the contract. The combination of contract address and token ID identifies one specific NFT.

Smart contract

A smart contract is the program on the blockchain that issues the tokens, records owners and handles transfers. For an NFT collection, the contract is the rulebook. What you can do with a token, and what anyone you authorise can do with it, is set by its code.

ERC-721

ERC-721 is the Ethereum standard interface for non-fungible tokens. It was created on 24 January 2018 and has Final status. It defines functions such as ownerOf, transferFrom, approve and setApprovalForAll. One correction to a common claim: the standard itself lists CryptoPunks as an earlier NFT project that is only "partially ERC-20 compatible". CryptoPunks was not built as an ERC-721 contract.

ERC-1155

ERC-1155 is a "multi-token" standard. It was created on 17 June 2018 and has Final status. A single ERC-1155 contract "can represent any number of fungible and non-fungible token types". It supports batch transfers, which move several token types in one transaction. Games and editions use it often.

Token ID and contract address

The contract address is the on-chain address of the collection's smart contract. Copies of an artwork can be minted under a different contract. The address is the part a scammer cannot copy, so check it against the project's official site before you buy.

Metadata and tokenURI

Under ERC-721, a contract can expose tokenURI, which points to a JSON file with optional name, description and image fields. The standard notes that this URI "may be mutable". The image is usually not stored in the token. If the file sits on an ordinary web server, the owner of that server can change or remove what your token shows. Content-addressed storage such as IPFS, or fully on-chain data, depends less on any one server.

Gas, gwei and gas wars

Gas measures the computation an Ethereum transaction uses. Fees are paid in ETH, usually quoted in gwei. One gwei is one-billionth of an ETH. Each fee has two parts: a protocol-set base fee, which is burned, and an optional priority fee (a tip) paid to validators to get the transaction included sooner. According to ethereum.org, the fee is paid "regardless of whether a transaction succeeds or fails". A failed mint still costs gas. A "gas war" is the community name for buyers raising priority fees against each other during a crowded mint.

Proof-of-stake and The Merge

Ethereum moved from proof-of-work mining to proof-of-stake at The Merge on 15 September 2022. Ethereum.org puts the resulting fall in the network's energy use at about 99.95%.

Minting and trading terms

Mint

To mint is to create a new token by calling the collection's contract. The token ID is recorded on-chain with your address as the first owner. You pay gas, plus any mint price the creator sets. For example, the Bored Ape Yacht Club contract on Etherscan has a mint price (apePrice) of 0.08 ETH and a supply cap of 10,000. Both values are read from the deployed contract.

Free mint, allowlist, airdrop

• Free mint: there is no mint price, but the minter still pays gas.
• Allowlist (formerly "whitelist"): a list of addresses allowed to mint before the public sale opens.
• Airdrop: tokens or NFTs sent directly to addresses. Ethereum.org warns that scam projects also airdrop NFTs, which point you to a fake site that asks you to approve a transaction (see the safety section below).

Primary and secondary market

The primary market is the mint. The secondary market is any later resale between holders on an NFT marketplace.

Floor price

The floor price is the lowest current asking price for any item in a collection. It is a listing price, not a sale price, and one seller can move it. The term only fits collections with many similar items. A 1:1 artwork has no floor.

Dutch and English auctions

In a Dutch auction the price starts high and steps down until buyers accept. In an English auction the price starts low and rises with each bid.

Royalties and ERC-2981

A royalty is a share of a resale price meant for the original creator. The Ethereum royalty standard, ERC-2981 (created 15 September 2020, Final), only lets a contract report how much royalty it asks for. The standard states that "the royalty payment must be voluntary". It also says that if a marketplace does not implement it, "no funds will be paid for secondary sales". In other words, royalties depend on marketplace policy. The token does not enforce them.

Blue chip, ATH, ATL

"Blue chip" is informal shorthand for long-running collections with high, sustained trading activity. It has no fixed definition. ATH and ATL mean all-time high and all-time low price.

Collection formats

• 1:1: a single unique work.
• Generative art: pieces produced by an algorithm at mint, each output different.
• PFP / 10k collection: a large set of profile-picture avatars whose rarity comes from trait combinations.
• Editions: several identical copies of one work, numbered or open, often issued under ERC-1155.
• Traits and rarity: the attributes in a token's metadata, and how rare each one is within the collection. Rarity scores come from third-party tools, not from the token.

Wallet and safety terms

Wallet, private key, recovery phrase

A wallet holds the keys that control your addresses. It does not hold the NFTs, which stay on the blockchain. The recovery (seed) phrase restores every account in a wallet. Ethereum.org says: "Never, for any reason, share your recovery phrase or private keys". It also warns that screenshots of a seed phrase can sync to cloud storage.

Hot and cold wallets

A hot wallet is software on an internet-connected device. It is convenient for minting and signing. A cold (hardware) wallet keeps the private key on a separate device so that, as ethereum.org puts it, "your private key never touches the internet".

Approval and setApprovalForAll

This is the most important safety term for NFT holders. ERC-721's approve lets one address move one specific token. setApprovalForAll lets an "operator" manage all of your NFTs in that contract. Marketplaces need this permission to sell on your behalf. A drainer site asks for the same signature. Read what you are signing, avoid unlimited approvals you do not need, and revoke old ones, as ethereum.org advises.

Phishing and fake airdrops

Fake mint links, fake support accounts and "claim your airdrop" pages all aim to get a signature or your seed phrase. Get mint links only from the project's official site, and never type your seed phrase into a website.

Rug pull

A rug pull happens when a team collects mint money and abandons the project. The tokens remain on-chain, but promised development, utility or community stops. Common warning signs are an unidentified team, a roadmap with nothing delivered, and pressure to mint fast.

Wash trading

Wash trading is selling an asset back and forth between wallets the same party controls, to fake volume and price. In a report dated 2 February 2022, Chainalysis identified 262 users who had sold NFTs to self-financed addresses more than 25 times. The 110 profitable ones made about $8.9 million and the 152 unprofitable ones lost about $417,000. The firm noted that it counted only ETH and WETH trades and could not be fully certain about every flagged account. In practice, if a collection's volume comes from a small, connected set of wallets, the volume is weak evidence of real demand.

Honeypot contract

A honeypot is a contract that lets you buy a token but blocks or penalises transfers and sales. One warning sign is a collection with buys but almost no successful resales. A verified source code listing on a block explorer lets you, or someone you trust, read the transfer logic.

Newer terms

Ordinals and inscriptions (Bitcoin)

Ordinal theory gives each satoshi its own identity. One bitcoin is 100,000,000 satoshis. An inscription attaches content to a single sat. According to the Ordinals handbook, inscription content "is entirely on-chain, stored in taproot script-path spend scripts", and by default the inscription is made on the first sat of its input. The protocol, created by Casey Rodarmor, launched in January 2023.

Soulbound tokens

A soulbound token is a non-transferable token tied to one address, used for credentials, memberships or attendance. Vitalik Buterin brought the idea to Ethereum in a post dated 26 January 2022. He took it from games, where "a soulbound item, once picked up, cannot be transferred or sold to another player." ERC-5192 (created 1 July 2022, Final) is a minimal soulbound interface for ERC-721. When its locked(tokenId) function returns true, transfers must revert.

Layer 2

A Layer 2 is a network that executes transactions off Ethereum's main chain and settles back to it, so fees are lower. Many NFT collections now mint on Layer 2s.

Community slang

• GM: good morning, a daily greeting in community chats.
• WAGMI / NGMI: "we're all gonna make it" and "not gonna make it".
• HODL: hold through volatility instead of selling.
• FUD: fear, uncertainty and doubt. It is sometimes used to dismiss valid criticism.
• FOMO: fear of missing out.
• DYOR: do your own research.
• LFG: an expression of excitement.
• Degen: a fast, high-risk buyer.
• Whale: a holder large enough to move prices.
• OG: an early member of a community.
• Diamond hands / paper hands: someone who holds through drawdowns, and someone who sells at the first drop.
• Aping in: buying quickly without research.

A five-point check before buying

1. Confirm the contract address against the project's official website, not a direct message or a reply in a chat.
2. Check where tokenURI points: a web server, IPFS or on-chain data.
3. Read exactly what each signature approves, especially setApprovalForAll.
4. Look at who is trading: many unrelated wallets, or a small connected group.
5. Compare what the roadmap promised with what has been delivered.

Limitations: this is a glossary, not a market review. It includes no prices or forecasts, and nothing here is investment advice.