What Is An Escrow?
An escrow is used to control and protect financial assets. It is a legal arrangement where a third party temporarily holds an asset or currency on behalf of two parties until the agreed-upon conditions of both parties involved are met.
The escrow service acts as a middleman and guarantor that both party’s funds/assets are safe until the deal has been completed to the satisfaction of both parties.
For example:
If someone wants to sell or swap their NFT with another person they do not know (trust), they can use an NFT escrow service. This escrow service ensures that the sale process is smooth and successful for both parties involved.
The NFT escrow platform (business) charges a small fee for this service.
How Do NFT Escrows Work?
Decentralised (on the blockchain) NFT escrow services have a huge advantage over traditional ones.
At no point is the money or items in total control by a single actor. Smart contracts are used to ensure the process is concluded to the satisfaction of all parties involved.
Yawww is a perfect example of a P2P NFT escrow platform. They also ensure that the NFT being traded is authenticated. This is done by verifying the mint authority, creator address, royalty percentages, date minted, and more and compare this information to the known real NFT collection.
Yawww has created an official video showing an actual P2p NFT trade. Watch this video to understand how escrows work.
Not all escrow services work identically, so it is worth researching which one best suits your needs. Some are easier to understand and use than others.
Ensure you only use a well-known certified, and trusted escrow company/platform.
How Do NFT Escrows Work?
Decentralised (on the blockchain) NFT escrow services have a huge advantage over traditional ones.
At no point is the money or items in total control by a single actor. Smart contracts are used to ensure the process is concluded to the satisfaction of all parties involved.
Yawww is a perfect example of a P2P NFT escrow platform. They also ensure that the NFT being traded is authenticated. This is done by verifying the mint authority, creator address, royalty percentages, date minted, and more and compare this information to the known real NFT collection.
Yawww has created an official video showing an actual P2p NFT trade. Watch this video to understand how escrows work.
Not all escrow services work identically, so it is worth researching which one best suits your needs. Some are easier to understand and use than others.
Ensure you only use a well-known certified, and trusted escrow company/platform.
Is It Safe To Use An Escrow Service?
We have compiled an NFT resource directory to help you find businesses that offer NFT escrow facilities and services.
What Is The Payment Method When Using An NFT Escrow Service?
You usually pay with cryptocurrency.
What Is The Purpose Of An NFT Escrow Service?
To protect peer-to-peer NFT traders from being scammed.
Why Do NFT Investors Use An Escrow Service?
NFT investors sometimes like to use an NFT loan platform. There are now NFT loan services that use escrow to protect your NFT. You can take a loan out using your NFT as collateral, or use an automated market maker (AMM) utilising LPs.
Peer-to-peer NFT trading
NFT swap platforms allow you to swap one NFT for someone else’s NFT. These are private deals made between two parties, and the swap platforms act as an escrow to ensure no one is scammed.
The most popular escrow service for Solana NFTs is the famous fox platform.
P2P NFT escrow services have grown in popularity as investors who own expensive NFTs can avoid the high NFT exchange fees (2.5%) and also circumvent the royalty fees owed to projects. These royalty fees can be as much as 10%, which adds up when you are selling a $20,000 NFT.
You can also visit our NFT resource directory to find useful links to help you invest in NFT more effectively.
Visit us today at spendingcrypto.com
Author:
Jonathan Titley
Founder:
spendingcrypto.com
Co-founder:
https://fomomagazine.io
(NFT industry magazine and project reviews)
Disclaimer:
All information in this article is for educational purposes only.
