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NFTs Explained: What Are Non-Fungible Tokens?

A definitive guide to explain NFTs, or non-fungible tokens.
Token Metrics Team
7 minutes
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NFTs, or non-fungible tokens, are gaining widespread popularity in the market for digital art and collectibles. In recent years, NFTs have become a cultural phenomenon, attracting the attention of crypto enthusiasts, digital art creators, and celebrities alike. As the Web 3.0 ecosystem continues to grow and adoption increases, many believe that NFTs will play a key role in the ownership of assets online.

So what are NFTs? Let's find out.

‍NFT Basics

NFTs, or non-fungible tokens, are a type of digital asset that represents ownership of something on the blockchain.

NFTs can be anything such as art, collectibles, music, profile pictures or PFP, DAO memberships, event tickets, gaming assets, virtual land, domain names, and so on. They can represent either completely digital assets or tokenized versions of assets that exist in the real world. Currently, there is a lot of excitement around using NFTs to sell virtual art.

Characteristics of NFTs

  • Ownership: NFT represents digital ownership of an item on a blockchain
  • Permanent: NFTs have data permanently stored within the token. This information includes images, messages, signatures, or any other data
  • Programmable: An NFT can be programmed to do anything. For example, an NFT artwork might be programmed to pay the artist royalties on every secondary sale of that artwork
  • Unique: NFTs are unique, and that uniqueness can be confirmed on a blockchain

How to Make an NFT

To create an NFT, or non-fungible token, you will need to first prepare your media file. NFTs can support a wide range of file types, including audio, images, and even 3D files. Some popular file types that are supported by NFTs include MP3, JPG, PNG, and GIF. You can also use 3D file formats like GLB to create NFTs that represent unique, digital objects.

Once your media is ready, you will need to set up a non-custodial wallet to securely store the cryptocurrency that you will use to buy, sell, and create NFTs. Non-custodial wallets are important because they allow you to retain control of your private keys, which are needed to access your cryptocurrency and make transactions. There are many different wallet options available, so it is important to do your research and choose one that is secure and user-friendly.

Once you have set up your wallet, you will need to buy Ethereum, or other fungible tokens depending on the blockchain being used, to cover the cost of minting your NFT. Ethereum is the most commonly used blockchain for NFTs, and it is typically the easiest to get started with. You can buy Ethereum using a variety of methods, including through a cryptocurrency exchange or from other individuals who are willing to sell.

Once you have your Ethereum, you will need to connect your wallet to an NFT marketplace like Rarible or OpenSea. These platforms allow you to easily create and mint your NFT, as well as trade and purchase NFTs created by others. To connect your wallet, simply tap the "Connect" button in the top right corner of the marketplace's website. This will create an account for you on the platform and allow you to begin creating your NFT.

To create your NFT, upload your media file to the platform and provide a description of your asset. You can choose to create a standalone piece, or create multiple NFTs of the same piece, each with its own unique characteristics. You can also set rules around royalties and other aspects of your NFT to ensure that you are fairly compensated for your work.

Once you are ready to mint your NFT, the process will require you to pay a small amount of ETH for transaction fees. This is necessary to get your NFT added to the blockchain and verified as unique. Once your NFT is minted, it will be available for trade and purchase on the marketplace. You can monitor the progress of your NFT and track its sales through your wallet or the marketplace's website.

NFT Secondary Markets

Creators make NFTs using blockchain-based minting platforms to retain more control over their creative output. Once NFTs are minted on a non-custodial wallet-compatible website, collectors and traders can sell these assets on the secondary market.

Here is a list of the most used NFT marketplaces:

  • OpenSea: OpenSea is the first and largest marketplace for NFTs. OpenSea is building tools that allow consumers to trade their items, creators to launch new digital works, and developers to build rich, integrated marketplaces for their digital items. It recently announced the support for Solana-based NFTs.
  • Coinbase NFT: Coinbase, a cryptocurrency exchange, recently launched its NFT marketplace in beta version to the public. This marketplace acts as a social media platform in which users can not only buy and sell NFTs but also interact with and showcase their collections using user profiles, likes, and comments.
  • Solanart: Solanart is the first and largest fully-fledged NFT marketplace on Solana. Users can get quick and easy access to digital collectibles, and explore, buy, and sell NFTs that run on the Solana blockchain.
  • Rarible: Rarible is a do-it-yourself NFT marketplace where you can mint NFTs when and how you please. Creators are highly favorable towards Rarible, as the minting process is free, easy, and unrestricted. Rarible’s native governance token “RARI” is used to incentivize platform users and give the community members a voice.
  • Nifty Gateway: Nifty Gateway is owned by the Gemini crypto exchange and has become one of the most known NFT marketplaces lately. They focus on viral drops from artists like Beeple, Trevor Jones, Pak, and more.
  • SuperRare: SuperRare (SR) is one of Ethereum’s debut crypto-art NFT marketplaces. Artists must be accepted to the platform before they can list their assets.

Notable NFT Projects

NFT-based companies have seen significant growth in recent years. Some notable examples include:

  • Yuga Labs: a blockchain technology company that creates Ethereum-based NFTs and digital collectibles. Yuga's most valuable NFT collection is Bored Ape Yacht Club, which has seen a floor price of over 150 ETH at its all-time high. In addition to apes, Yuga has also created dog NFTs, mutant apes, and deeds for its Metaverse. The company recently acquired Larva Labs, bringing high-value projects like Cryptopunks and Meebits under the Yuga brand. Yuga is backed by investors like Coinbase, Samsung, and Mark Cuban.
  • Doodles: a collection of 10,000 Ethereum-based NFTs created by artist BurntToast. The Doodles collection includes a wide range of visual traits, heads, costumes, and colorways. Owners of Doodles NFTs have exclusive access to new experiences like Space Doodles and Dooplicator.
  • Okay Bears: a collection of 10,000 Solana-based NFTs. Ownership of an Okay Bear grants access to a community of collectors and exclusive products, merchandise, and events.

Investing in NFTs

NFTs, or non-fungible tokens, provide many benefits as an investment vehicle.

One of the main advantages of NFTs is that they allow physical objects, such as artwork, to be tokenized.

Additionally, NFTs offer greater liquidity for investors, making it easier to trade and sell their assets.

The Future of NFTs

NFTs offer a new way to represent and prove ownership of assets on the blockchain.

This technology has already been used for digital art, collectibles, and in-game assets, but it has the potential to be applied to a wide range of other industries as well. For example, tokenized real estate could provide a way for people to invest in property without the barriers to entry that currently exist.

High-end fashion brands like Louis Vuitton have also expressed interest in using NFTs to track the ownership of luxury items.

Additionally, NFTs can be used to tokenize certifications, degrees, and licenses, providing a way to securely track and maintain this sensitive data on the blockchain.

Overall, the potential applications for NFTs are nearly limitless.

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You're tracking 50+ tokens across three exchanges, updating your rebalancing spreadsheet every weekend, and second-guessing every exit decision at 2 AM. Sound familiar? Manual crypto portfolio management isn't just exhausting—it's expensive. Between missed rebalances, execution drag, and behavioral mistakes during volatility, DIY portfolio management quietly erodes returns before you see any market gains.

The data tells the story: investors who manually manage diversified crypto portfolios typically underperform comparable automated strategies by 12-18% annually, with 60% of that gap coming from operational inefficiency rather than market timing. If you're spending 10+ hours weekly maintaining positions, those hours have a cost—and it's higher than you think.

The Hidden Costs Destroying Your Returns

Time Drain: The 500-Hour Tax

Managing a diversified crypto portfolio demands constant vigilance. For investors holding 20+ positions, the weekly time investment breaks down to approximately:

  • Market monitoring: 5-8 hours tracking prices, news, and on-chain metrics
  • Rebalancing calculations: 2-3 hours determining optimal weights and required trades
  • Order execution: 3-5 hours placing trades across multiple platforms
  • Record keeping: 1-2 hours logging transactions for tax reporting
  • Research updates: 3-5 hours staying current on project developments

That's 14-23 hours weekly, or 728-1,196 hours annually. At a conservative $50/hour opportunity cost, you're spending $36,400-$59,800 in time value maintaining your portfolio. Even if you value your time at minimum wage, that's still $10,000+ in annual "sweat equity" that automated solutions eliminate.

Execution Drag: Death by a Thousand Trades

Small trades erode portfolios through accumulated friction. Every manual rebalance across a 50-token portfolio requires dozens of individual transactions, each incurring:

  • Trading fees: 0.1-0.5% per trade (average 0.25%)
  • Bid-ask spreads: 0.2-0.8% depending on liquidity
  • Slippage: 0.3-1.2% on smaller cap tokens
  • Gas fees: $2-50 per transaction depending on network congestion

For a $100,000 portfolio rebalanced monthly with 40 trades per rebalance, the costs add up:

  • Average cost per trade: ~$100
  • Monthly execution drag: $4,000
  • Annual execution drag: $48,000 (48% of portfolio value)

The smaller your individual trades, the worse the ratio becomes. A $500 rebalancing trade on a low-liquidity altcoin might pay $25 in fees—a 5% instant loss before any price movement.

Automated indices solve this. TM Global 100, Token Metrics' rules-based index, consolidates 100 individual positions into a single transaction at purchase, with weekly rebalances executed through optimized smart contract batching. Users typically save 3-7% annually in execution costs alone compared to manual approaches.

Behavioral Mistakes: Your Worst Enemy Is in the Mirror

Market psychology research shows that manual portfolio managers tend to make predictable, costly mistakes:

  • Panic selling during drawdowns: When Bitcoin drops 25% in a week, can you stick to your exit rules? Many override their plans during high volatility, often selling near local bottoms.
  • FOMO buying at peaks: Tokens up 300% in a week attract chase behavior, with managers entering after the movement is mostly over.
  • Rebalancing procrastination: Putting off rebalancing leads to drift, holding too much of past winners and missing new opportunities.

Token Metrics' systematic approach removes emotion from the equation. The TM Global 100 Index follows a transparent ruleset: hold the top 100 tokens by market cap during bullish phases, shift to stablecoins during bearish cycles, and rebalance weekly—eliminating emotional override and procrastination.

Missed Rebalances: Drifting Out of Position

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In Q3 2024, Solana ecosystem tokens surged while Ethereum DeFi tokens consolidated. Manual managers who missed weekly rebalances held too much ETH and insufficient SOL exposure. The result: 15-20% underperformance compared to systematically rebalanced portfolios. Data from Token Metrics shows that weekly rebalancing outperforms monthly or quarterly approaches by 8-12% annually.

Tax Reporting Nightmares

Every trade creates a taxable event. Manual managers executing over 200 trades yearly face:

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  • High professional accounting fees ($500-2,000+)

Automated solutions like Token Metrics provide transparent transaction logs for each rebalance, simplifying tax reporting and reducing accounting costs.

The Token Metrics Advantage: Research Meets Execution

Token Metrics has established itself as a leading crypto analytics platform, supporting over 50,000 users with AI-powered token ratings, market regime detection, portfolio optimization tools, and trading signals. But analysis alone isn't enough—implementation is crucial.

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Automation Without Compromise

The best automation is transparent. TM Global 100 offers:

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  • Full methodology disclosure
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This streamlined process allows users to rapidly execute disciplined rebalancing, saving countless hours and increasing operational efficiency while maintaining asset control.

Decision Framework: When to Automate

Automation suits investors who:

  • Hold 15+ tokens and find rebalancing burdensome
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Manual management may be suitable for those with fewer positions, active trading infrastructure, or tactical strategies. For most diversified portfolios, automation enhances efficiency and reduces operational errors.

The Compound Effect of Efficiency

Small inefficiencies compound over time. Over five years, a $50,000 portfolio managed manually with a 12% annual return minus 4-2-1% losses yields roughly a 5% net return, ending at about $63,814. A systematic approach with optimizer integration, zero behavioral errors, and regular rebalancing can attain a 13% net return, reaching approximately $92,246—an increase of over $28,000, not counting time saved.

Conclusion: Time Back, Returns Up

Manual crypto portfolio management made sense when portfolios were small and concentrated. Today’s diversified sets require operational discipline to prevent erosion of returns due to execution drag, missed rebalances, and emotional mistakes. Token Metrics built TM Global 100 to turn research into automated, transparent execution, reclaim your time, and boost portfolio discipline—without sacrificing control.

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The biggest gains in crypto rarely come from the majors. They come from Moonshots—fast-moving tokens with breakout potential. The Moonshots API surfaces these candidates programmatically so you can rank, alert, and act inside your product. In this guide, you’ll call /v2/moonshots, display a high-signal list with TM Grade and Bullish tags, and wire it into bots, dashboards, or screeners in minutes. Start by grabbing your key at Get API Key, then Run Hello-TM and Clone a Template to ship fast.

What You’ll Build in 2 Minutes

Why This Matters

Discovery that converts. Users want more than price tickers, they want a curated, explainable list of high-potential tokens. The Moonshots API encapsulates multiple signals into a short list designed for exploration, alerts, and watchlists you can monetize.

Built for builders. The endpoint returns a consistent schema with grade, signal, and context so you can immediately sort, badge, and trigger workflows. With predictable latency and clear filters, you can scale to dashboards, mobile apps, and headless bots without reinventing the discovery pipeline.

Where to Find The Moonshots API

The cURL request for the Moonshots endpoint is displayed in the top right of the API Reference. Grab it and start tapping into the potential!

How It Works (Under the Hood)

The Moonshots endpoint aggregates a set of evidence—often combining TM Grade, signal state, and momentum/volume context—into a shortlist of breakout candidates. Each row includes a symbol, grade, signal, and timestamp, plus optional reason tags for transparency.

For UX, a common pattern is: headline list → token detail where you render TM Grade (quality), Trading Signals (timing), Support/Resistance (risk placement), Quantmetrics (risk-adjusted performance), and Price Prediction scenarios. This enables users to understand why a token was flagged and how to act with risk controls.

Polling vs webhooks. Dashboards typically poll with short-TTL caching. Alerting flows use scheduled jobs or webhooks to smooth traffic and avoid duplicates. Always make notifications idempotent.

Production Checklist

Use Cases & Patterns

Next Steps

FAQs

1) What does the Moonshots API return?

A list of breakout candidates with fields such as symbol, tm_grade, signal (often Bullish/Bearish), optional reason tags, and updated_at. Use it to drive discover tabs, alerts, and watchlists.

2) How fresh is the list? What about latency/SLOs?

The endpoint targets predictable latency and timely updates for dashboards and alerts. Use short-TTL caching and queued jobs/webhooks to avoid bursty polling.

3) How do I use Moonshots in a trading workflow?

Common stack: Moonshots for discovery, Trading Signals for timing, Support/Resistance for SL/TP, Quantmetrics for sizing, and Price Prediction for scenario context. Always backtest and paper-trade first.

4) I saw results like “+241%” and a “7.5% average return.” Are these guaranteed?

No. Any historical results are illustrative and not guarantees of future performance. Markets are risky; use risk management and testing.

5) Can I filter the Moonshots list?

Yes—pass parameters like min_grade, signal, and limit (as supported) to tailor to your audience and keep pages fast.

6) Do you provide SDKs or examples?

REST works with JavaScript and Python snippets above. Docs include quickstarts, Postman collections, and templates—start with Run Hello-TM.

7) Pricing, limits, and enterprise SLAs?

Begin free and scale up. See API plans for rate limits and enterprise options.

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Most traders still draw lines by hand in TradingView. The support and resistance API from Token Metrics auto-calculates clean support and resistance levels from one request, so your dashboard, bot, or alerts can react instantly. In minutes, you’ll call /v2/resistance-support, render actionable levels for any token, and wire them into stops, targets, or notifications. Start by grabbing your key on Get API Key, then Run Hello-TM and Clone a Template to ship a production-ready feature fast.

What You’ll Build in 2 Minutes

A minimal script that fetches Support/Resistance via /v2/resistance-support for a symbol (e.g., BTC, SOL).

  • A one-liner curl to smoke-test your key.
  • A UI pattern to display nearest support, nearest resistance, level strength, and last updated time.

Next Endpoints to add

  • /v2/trading-signals (entries/exits)
  • /v2/hourly-trading-signals (intraday updates)
  • /v2/tm-grade (single-score context)
  • /v2/quantmetrics (risk/return framing)

Why This Matters

Precision beats guesswork. Hand-drawn lines are subjective and slow. The support and resistance API standardizes levels across assets and timeframes, enabling deterministic stops and take-profits your users (and bots) can trust.

Production-ready by design. A simple REST shape, predictable latency, and clear semantics let you add levels to token pages, automate SL/TP alerts, and build rule-based execution with minimal glue code.

Where to Find

Need the Support and Resistance data? The cURL request for it is in the top right of the API Reference for quick access.

👉 Keep momentum: Get API Key • Run Hello-TM • Clone a Template

How It Works (Under the Hood)

The Support/Resistance endpoint analyzes recent price structure to produce discrete levels above and below current price, along with strength indicators you can use for priority and styling. Query /v2/resistance-support?symbol=<ASSET>&timeframe=<HORIZON> to receive arrays of level objects and timestamps.

Polling vs webhooks. For dashboards, short-TTL caching and batched fetches keep pages snappy. For bots and alerts, use queued jobs or webhooks (where applicable) to avoid noisy, bursty polling—especially around market opens and major events.

Production Checklist

  • Rate limits: Respect plan caps; add client-side throttling.
  • Retries/backoff: Exponential backoff with jitter for 429/5xx; log failures.
  • Idempotency: Make alerting and order logic idempotent to prevent duplicates.
  • Caching: Memory/Redis/KV with short TTLs; pre-warm top symbols.
  • Batching: Fetch multiple assets per cycle; parallelize within rate limits.
  • Threshold logic: Add %-of-price buffers (e.g., alert at 0.3–0.5% from level).
  • Error catalog: Map common 4xx/5xx to actionable user guidance; keep request IDs.
  • Observability: Track p95/p99; measure alert precision (touch vs approach).
  • Security: Store API keys in a secrets manager; rotate regularly.

Use Cases & Patterns

  • Bot Builder (Headless): Use nearest support for stop placement and nearest resistance for profit targets. Combine with /v2/trading-signals for entries/exits and size via Quantmetrics (volatility, drawdown).
  • Dashboard Builder (Product): Add a Levels widget to token pages; badge strength (e.g., High/Med/Low) and show last touch time. Color the price region (below support, between levels, above resistance) for instant context.
  • Screener Maker (Lightweight Tools): “Close to level” sort: highlight tokens within X% of a strong level. Toggle alerts for approach vs breakout events.
  • Risk Management: Create policy rules like “no new long if price is within 0.2% of strong resistance.” Export daily level snapshots for audit/compliance.

Next Steps

  • Get API Key — generate a key and start free.
  • Run Hello-TM — verify your first successful call.
  • Clone a Template — deploy a levels panel or alerts bot today.
  • Watch the demo: Compare plans: Scale confidently with API plans.

FAQs

1) What does the Support & Resistance API return?

A JSON payload with arrays of support and resistance levels for a symbol (and optional timeframe), each with a price and strength indicator, plus an update timestamp.

2) How timely are the levels? What are the latency/SLOs?

The endpoint targets predictable latency suitable for dashboards and alerts. Use short-TTL caching for UIs, and queued jobs or webhooks for alerting to smooth traffic.

3) How do I trigger alerts or trades from levels?

Common patterns: alert when price is within X% of a level, touches a level, or breaks beyond with confirmation. Always make downstream actions idempotent and respect rate limits.

4) Can I combine levels with other endpoints?

Yes—pair with /v2/trading-signals for timing, /v2/tm-grade for quality context, and /v2/quantmetrics for risk sizing. This yields a complete decide-plan-execute loop.

5) Which timeframe should I use?

Intraday bots prefer shorter horizons; swing/position dashboards use daily or higher-timeframe levels. Offer a timeframe toggle and cache results per setting.

6) Do you provide SDKs or examples?

Use the REST snippets above (JS/Python). The docs include quickstarts, Postman collections, and templates—start with Run Hello-TM.

7) Pricing, limits, and enterprise SLAs?

Begin free and scale as you grow. See API plans for rate limits and enterprise SLA options.

Disclaimer

This content is for educational purposes only and does not constitute financial advice. Always conduct your own research before making any trading decisions.

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