Structure, Lifecycle, and Legal Considerations of NFTs BBLC Practice Questions (Page 4)

Questions 16–20

1. 16application · medium

   A company is planning to launch an NFT collection that also provides holders with voting rights in a DAO. The company wants to avoid the NFTs being classified as securities. Which feature should they avoid?

   • AAllowing holders to vote on community proposals.
   • BMaking the NFTs transferable on secondary markets.
   • CGiving holders a share of the company's profits.
   • DUsing a standard ERC-721 contract.
   Reveal Solution Discussion Select an answer first
2. 17expert · hard

   A startup is launching an NFT collection that represents membership in an exclusive club. The NFTs are sold in a public sale, and holders receive a share of the club's revenue from events. The startup wants to avoid securities regulation while also ensuring that buyers understand they are not purchasing equity. Which approach is most likely to achieve this?

   • AUse a utility token standard instead of ERC-721.
   • BLimit the number of NFTs to 100 to avoid public offering rules.
   • CStructure the NFTs as pure membership passes with no revenue-sharing and clearly state that they confer no financial rights.
   • DKeep the revenue-sharing but add a disclaimer that the NFTs are not securities.
   Reveal Solution Discussion Select an answer first
4. 18expert · hard

   An NFT project is experiencing a security vulnerability in its smart contract that could allow unauthorized transfers. The project wants to mitigate the issue while preserving the NFTs' value. Which action is most appropriate?

   • ADo nothing, as the vulnerability is unlikely to be exploited.
   • BBurn all NFTs to prevent unauthorized transfers.
   • CPause the contract using a built-in pause function, then deploy a patched version and migrate NFTs.
   • DChange the contract's owner to a new address.
   Reveal Solution Discussion Select an answer first
5. 19expert · hard

   A developer is building an NFT marketplace that supports multiple blockchains. They want to ensure that NFTs from different chains can be traded in a unified interface. Which approach is most effective?

   • ARequire all NFTs to be migrated to a single blockchain.
   • BOnly support NFTs from one blockchain to simplify development.
   • CUse a cross-chain bridge or aggregation protocol to interact with multiple chains.
   • DUse a centralized database to store NFTs from all chains.
   Reveal Solution Discussion Select an answer first
6. 20application · medium

   A digital art marketplace is implementing a royalty system for NFT creators. They want creators to receive a percentage of every secondary sale automatically. Which approach is most reliable?

   • AUse a centralized registry to track sales and distribute royalties.
   • BInclude royalty terms in the metadata and hope that buyers honor them.
   • CEncode a royalty fee in the NFT smart contract that is enforced during transfers.
   • DRely on the marketplace to manually pay royalties to creators after each sale.
   Reveal Solution Discussion Select an answer first