What is the NFT floor price?
What is the NFT floor price?
NFT floor price: NFT floor prices are a way for market participants to try to get a better idea of what an NFT project is really worth at the aggregate level. Removing collection factors such as rarity, traits, and other considerations helps an NFT buyer’s decision-making process and analysis.
The easiest way to determine an NFT floor price is to take NFT which is sold for the lowest amount. As an illustration, the floor price for Bored Ape Yacht Club (BAYC) NFT collection on Opensea is 79,079 ETH because it is the lowest list price for a BAYC NFT in the market.
How to calculate NFT floor prices?
NFT floor prices can be calculated in a number of different ways. The simplest method is to simply take the lowest value of each NFT in the collection.
Let’s say it’s random NFT collection has the lowest price of $40. The de facto floor price is thus $40. If someone buys the NFT, the minimum price rises to $50 and is represented by the next NFT with the lowest price. The floor price drops to the NFT’s price if someone bids it for less than $40.
Also read: What are NFT derivatives? How are they different from the original NFT?
Factors responsible for NFT Floor Price
The floor price of a given NFT collection may at first glance appear to be a simple and accurate measure of the NFT’s lowest possible value. To accurately determine an NFT collection’s floor price, there are a number of other factors to consider.
- Fragmentation of the marketplace
- Liquidity
- Outliers
- Price manipulation
What does it mean to sweep the floor in the NFT area?
Sweeping the floor usually refers to buying a number of digital assets, especially those that are part of a collection, in large quantities.
Sweeping the floor refers to both project owners and buyers in the NFT industry. If project owners sweep the floor, they pay the floor price for all their NFTs. When buyers sweep the floor, it either means that they have bought many or all of the NFTs that were offered in the project. These two things point to possible floor price manipulation.
An NFT floor price standard is required
New frameworks for NFT floor prices are constantly being developed by the rapidly growing non-fungible token ecosystem. Today’s environment requires users and developers to navigate a wide range of NFT data analysis projects. However, each of these has its own method of determining NFT floor prices. There is little or no consensus on the most effective method.
The foundation of Web3 ecosystem will be a standard NFT floor price feed. However, this will drive NFT derivatives, lending and borrowing protocols, efficient NFT pricing, NFT comparable services and other services.
Also read: What is NFT’s rarity? Why is rarity important to NFTs?
Top 10 Most Profitable NFTs (Update)
Here are the 10 most profitable NFTs
- Bored Ape Yacht Club
- CryptoPunks
- Mutant Ape Yacht Club
- Autoglyphs
- Chromie Squiggle – Art Blocks Curated
- The sandbox
- Azuki
- Decentralized country
- Otherdeed for Otherside
- Clone X
How to prevent manipulation of floor prices
Although buying the floor can be a good first move for new participants in an NFT project. However, the floor price is subject to manipulation. Newly launched NFT projects with high potential are often aggressively bought by an individual or group to artificially increase demand. Similar to how ticket scalpers buy event tickets and then resell them at a higher price, the buyer(s) can sell these newly acquired non-fungible tokens at a higher floor price after the sweep. Be wary of projects where the NFTs have been “swept” that lack significant communities.
Always review the transaction history of the NFT you want to buy. However, DYOR shall determine the project’s long-term value to avoid falling victim to floor prices that have been manipulated by a sweep. Join their Discord and Telegram groups and determine if their communities, such as social media followers, are trustworthy to help make NFT investment decisions.
Conclusion
The value of non-fungible tokens is primarily determined by market forces. Furthermore, it is impossible to predict with certainty what will happen to the NFT market in the future. But using metrics like minimum price and doing due diligence to inform your buying strategy will increase your chances of success.
Read also: What is real estate NFT? What impact does it have on the real estate sector?
