June 30, 2021
When you want to buy or sell WAX NFTs through other channels than the marketplace, people prefer to see this done through a WAX-backed token.
If you’re not familiar with this, it might be scary because you haven’t tried this method yet and things could possibly go wrong.
Therefore, this article will tell you everything you need to know about trading with WAX-backed tokens and prevents you from making costly mistakes.
What is a WAX Backed Token?
NFTs can store or hold WAX. If you own an NFT, you can always add WAX thanks to a feature of the Atomic Hub marketplace.
Upon burning an NFT backed with WAX, the NFT will release its WAX to the account that burned it. Only the owner of an NFT is able to burn it.
What is burning?
Burning is a process where an NFT gets removed from existence.
Make sure you never back WAX to an expensive NFT, as the WAX tokens can never be recovered unless the NFT is burned.
Once you’ve added WAX tokens to an NFT, you can always add extra WAX tokens though.
Why do people use WAX-backed tokens?
People use WAX Backed Tokens to avoid transaction fees. This is because the transaction costs can sometimes be high on marketplaces due to the following fees:
- Tokenomics fee(2%). This is the fee paid to WAX to improve the ecosystem.
- Marketplace fee(2%). This is the fee that a marketplace like Atomic Hub charges to continue offering its services.
- Collection fee (0 – 14%). The collection fee depends on the percentage set by the particular collection from which you are purchasing the card.
How to create a WAX backed token
If you want to back a token with WAX, you first need an NFT to back. You better use a useless or cheap NFT because this NFT will be lost once burned.
It’s a good practice to go to the Atomic Hub market, click the orange button next to the search area, and sort it to “Price (Lowest)”.
You should now see the cheapest NFTs which usually cost less than 1 WAX. Buy one, confirm the transaction and now let’s back it with some WAX.
Go to your inventory on Atomic Hub.
Find the worthless NFT you just purchased and click on the orange button “more”.
Select “Back Tokens”.
Enter the amount of WAX you want to back it with and press “Confirm”.
You should now have a WAX-backed token. Check if this is the case by clicking on the NFT and reading the properties section. It should display the amount right next to WAX Backed.
Now, you can send a link to your WAX-backed token to the player you want to trade with so that he can set up an offer. Or you can make the offer yourself, but the player has to have the NFT in his inventory.
Making an offer
To make an offer, go to the inventory of the player you want to trade with. You can do this by entering the wallet name in the Atomic Hub search bar. The account should appear in the search results.
Identify the NFT you want and click on the orange button “Make offer”.
You should appear on the trading interface of Atomic Hub, where you can select some of your own NFTs to propose an offer for the NFT’s of the other player.
The only thing you have to do now is select the WAX-backed token, double-check if the other players’ NFT is correct, and then select “Send trade offer”.
Why you should be careful with WAX backed token trades
Fake backed tokens
Scammers saw an opportunity to scam people. With a few Photoshop skills, they were able to trick people. See below a fake backed-up NFT.
Therefore, always look at the features of an NFT as shown in the following image.
A different but similar collection
Some scammers upload similar artworks and add the same details to an NFT, but it’s not the same verified collection.
Instead of rplanet the collection could be called rplanet1.
So always double-check the collection is correct.
Are WAX-backed token trades ethical?
Fees are induced for a reason: a monetary reward in exchange for a service.
Most people agree to pay the tokenomics fee of 2% to the WAX blockchain, but also to pay the 2% fee to the marketplace so that they can continue to improve their platform.
However, sometimes collections tend to go overboard with their collection fee. For example, R-Planet has one of the highest collection fees. With the 8% fee that they charge, users have to pay a total of 12% for a marketplace transaction.
These are the circumstances, where people start searching for alternative ways to trade, and backing NFTs with WAX was a great alternative that saves you a whopping 12% in this case.
Just remember that paying fees ultimately helps all three parties to improve whatever they’re doing, which will benefit you as well in the long term.
You now know exactly how to safely trade using backed tokens and why this is the preferred method for some players.
Please consider using one of the marketplaces for most of your trades as it really benefits the ecosystems and is generally less susceptible for scams and frauds.