Tokens & Assets

NFT

Non-Fungible Token

Unique digital tokens representing ownership of specific items

Definition

NFTs are unique digital tokens that represent ownership of specific digital or physical items. Unlike fungible tokens, each NFT is distinct and cannot be exchanged on a one-to-one basis.

NFT (Non-Fungible Token) is a token design term used to understand Unique digital tokens representing ownership of specific items. In practice, it matters because it affects how users evaluate protocols, compare opportunities, and avoid hidden assumptions.

Example

An NFT might represent ownership of digital art, in-game items, or even real estate deeds on the blockchain.

How it works

In practice, the concept shows up like this: An NFT might represent ownership of digital art, in-game items, or even real estate deeds on the blockchain.

Why it matters

NFT matters because small misunderstandings in DeFi can turn into bad pricing, liquidation, governance, custody, or smart-contract risk. A good mental model helps you compare protocols without relying on marketing language.

What to check

Treat it as a token-design concept: inspect supply mechanics, holder incentives, redemption paths, and governance controls. The main checks are: Illiquidity; Speculative bubbles; Storage dependencies.

Risks to Consider

Illiquidity
Speculative bubbles
Storage dependencies

Common Questions

What does NFT mean in DeFi?

NFT means Unique digital tokens representing ownership of specific items. The useful question is not only the definition, but how the mechanism changes risk, return, liquidity, or governance for the user.

How is NFT used in practice?

A practical example: An NFT might represent ownership of digital art, in-game items, or even real estate deeds on the blockchain.

What should I check before relying on NFT?

Check illiquidity, speculative bubbles, storage dependencies. Also verify liquidity, oracle assumptions, admin controls, and whether the protocol has been tested during stressed markets.