On Foundation, the entire auction process is on-chain. This means that every transaction that occurs, whether that’s bidding on NFT, or adding one to your collection, is permanently recorded on the Ethereum blockchain. The benefit to having all transactions recorded on-chain is to show the provenance of the NFT, including when it was first created, placed in an auction, and transferred to the wallet of its new collector.
Before an auction’s 24-hour countdown ends, the NFT is in escrow within a smart contract. At the end of the auction, both the creator or the new collector has the option to settle the auction via the notifications page.
Upon settlement, the smart contract confirms the auction has ended, and sends the NFT to the collector, and releases the funds in ETH to the creator. Every on-chain transaction requires a gas fee to execute.