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