Understanding NFT smart contracts

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Non-fungible tokens (NFTs) have taken the world by storm in recent years. At their core, NFTs are digital assets that represent ownership of unique items like art, music, videos, and more.

Understanding NFT smart contracts is key to fully grasping how NFTs work under the hood. NFTs are minted and traded through smart contracts on various blockchains like Ethereum. Let’s break down what smart contracts are and how they enable the creation, trading, and tracking of NFTs.

What are Smart Contracts?

A smart contract is a self-executing program that runs on a blockchain. Smart contracts are pieces of code that define a set of conditions to be met and execute automatically when those conditions are satisfied.

Some key features of smart contracts include:

  • Autonomy: They run automatically based on predefined conditions without needing a central authority.
  • Trustlessness: Parties can trust that the smart contract will execute as written without bias.
  • Transparency: They are visible to all parties on a blockchain so everyone can inspect their operations.
  • Immutability: They cannot be changed once deployed on a blockchain.

Smart contracts have a wide range of applications beyond NFTs like finance (DeFi), real estate, supply chain management and more.

How NFT Smart Contracts Work

Understanding NFT smart contracts requires grasping how they enable the creation, trading and tracking of non-fungible tokens. Here are some key ways smart contracts power NFT functionality:

NFT Creation

NFTs come into existence through smart contracts called NFT factories or templates. These contracts define the basic blueprint for creating NFTs that conform to certain standards like ERC-721 on Ethereum.

The NFT smart contract contains key metadata like:

  • NFT name
  • Description
  • Image/media
  • Properties
  • Ownership

Trading NFTs

NFT marketplaces like OpenSea use exchange smart contracts to facilitate trading of NFTs. These contracts control the actual exchange of the NFT from seller to buyer along with the cryptocurrency payment.

They ensure the transaction happens atomically meaning either completely succeeds or fails for both parties. This prevents fraud scenarios where a seller transfers the NFT but doesn’t get paid for it.

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Tracking Ownership

NFT smart contracts immutably track ownership of each NFT on a blockchain. The contract stores the wallet address of the current owner and updates it whenever an exchange takes place.

This enables tracing the entire chain of custody of an NFT from its creation to the current owner. Proving provenance and authenticity is a key value proposition of NFTs.

Programming Languages for NFT Smart Contracts

Understanding NFT smart contracts means knowing which programming languages are used most often to code them:

  • Solidity: The dominant language for writing Ethereum smart contracts due to its integration with the Ethereum Virtual Machine (EVM).
  • Rust: Gaining popularity given its speed, safety and suitability for blockchain development.
  • Vyper: Pythonic language focused on security for writing Ethereum contracts.
  • Bamboo: Emerging language created by Ankr for optimized WebAssembly contracting.

These languages make it easier for developers to implement the logic powering NFT functionality.

Benefits of Using Smart Contracts for NFTs

There are several key benefits that smart contracts unlock specifically for NFTs:

  • Removes intermediaries: Enables peer-to-peer transactions without needing centralized platforms.
  • Reduces fraud: atomic swaps prevent NFT theft and forged ownership.
  • Provides scarcity: NFT supply enforcement prevents duplication.
  • Automates processes: Activities like royalties happen automatically.
  • Enables interoperability: Composability between contracts allows unique combinations.

Examples of Popular NFT Smart Contracts

Here are some examples of widely used smart contracts specifically for powering different NFT platforms and collections:


This is the most common standard for NFTs on Ethereum. CryptoPunks, Bored Ape Yacht Club and Decentraland all use ERC-721 contracts.


Enables semi-fungible tokens. Axie Infinity uses this standard to represent both fungible in-game assets as well as non-fungible creatures and land.

Polygon Smart Contracts

Projects like MANA and Sandbox have ported their contracts to Polygon for lower gas fees.

Flow Standard NFT Contracts

The Flow blockchain has custom standards like FungibleTokens, NonFungibleTokens and MetadataViews.

Common Functions in NFT Smart Contracts

Here are some typical functions included in NFT smart contract code:

  • Minting: To create new NFTs
  • Burning: Removing NFTs from circulation
  • Transaction: Facilitating trading between accounts
  • Modification: Changing NFT metadata if needed
  • Enumeration: Listing all NFTs in a collection
  • Indexing: Mapping NFT IDs to owners

These demonstrate the broad capabilities that smart contracts provide for managing NFT lifecycles.

Limitations of NFT Smart Contracts

While smart contracts unlock many advantages for NFTs, they aren’t without certain limitations:

  • Bugs: Like any code, contracts are prone to defects if not properly audited.
  • Gas costs: Performing complex logic on-chain can be expensive.
  • Inflexibility: Logic can’t be changed once deployed.
  • Scalability: Performance bottlenecks due to blockchain congestion.

However, the NFT community is actively working to overcome these limitations with ongoing innovations.


In summary, smart contracts are the underlying technology enabling the unique functionality of NFTs. They automate transactions, provide transparency, and eliminate middlemen. NFT contracts are programmed with languages like Solidity and Vyper on networks like Ethereum and Flow. While limitations exist, smart contracts present enormous opportunities for creativity, ownership and community in the emerging world of digital assets and blockchain.



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