What Does NFT Floor Price Mean?
A common term referring to pricing in the NFT market is the “floor price”—it’s the backbone of NFT collections, and creators and investors are always aware of it.
So if you’re new to the industry, you might be asking yourself: why is this term so relevant for NFT enthusiasts?
The answer? By using it as a metric to analyze pricing, buyers can gain a clear understanding of the value of an NFT collection.
So what is the floor price NFT? Simply put, it is the lowest price for an NFT in a specific collection. When you don’t see the floor price specified on a marketplace, find the cheapest NFT in that collection and that will be the floor price.
There are a few details worth knowing to learn how pricing in NFT markets works.
What is a floor price NFT?
The floor price for NFTs is the lowest price you have to pay to buy an NFT from a specific collection. It isn’t the average price—it’s the minimum price for an NFT in a collection.
When collectors and investors evaluate the value of an NFT collection, the floor price is used as a metric to establish whether the NFT is undervalued or overvalued. It’s also an effective metric to spot market manipulation or scams.
It constantly changes when the last of the lowest-priced NFT of the collection gets sold.
How to calculate NFT floor price
The easiest way to calculate the floor price for an NFT project is to find the lowest-priced NFT in said collection. For most marketplaces, you can see the floor price specified by the platform on top of the collection. – you can see the floor price at the very top of the collection marketplace page.
To find the floor price for an NFT collection on OpenSea, follow these simple steps:
- Go to the OpenSea website and select the collection you’re interested in.
- Look for the floor price specified under the description of the collection.
- If the floor price isn’t specified, click on the filter and select the ‘Price low to high’ option.
- The first NFT listed with the lowest price is the floor price of the collection.
Who decides cost of NFT?
Creators initially set the floor price of the NFT collection before it gets released. This is called the “mint price.”
But as time goes by, floor price is determined by the demand and supply of the market, which is the number of buyers wanting to get their hands on NFTs and the number of NFTs available. To make it simple, the floor price changes when someone buys the lowest-priced NFT of the collection.
That’s why investors and collectors use the floor price to determine an NFT’s value. But this isn’t the only factor, nor the most significant.
What gives an NFT its value?
Investors use countless factors to determine the value of an NFT project; let’s talk about the main two to keep an eye on when analyzing NFT collections:
The utility of an NFT is the added use or real application that an NFT has either in real life or in the digital world. Sometimes, NFTs are used in video games or virtual worlds to interact with others.
But for the most part, project founders strive to give the holders of their collection special event access, VIP lounges, party invites, therapy sessions, and other social rewards.
The rarity of an NFT refers to how uncommon or scarce it is compared to other NFTs in a specific collection. It is determined by combining all individual attributes of a particular NFT and comparing them to other NFTs attributes in that collection. The less common the attribute, the rarer the NFT.
Can floor price change in NFT?
Floor prices constantly change in the world of NFTs. When someone buys the lowest-priced NFT of a collection, the next lowest-priced NFT becomes the updated floor price.
For example, if someone buys the cheapest NFT in a collection at 0.1 ETH, and the next lowest-priced NFT is worth 0.11 ETH, the floor price changes from 0.1 ETH to 0.11 ETH. Capiche?
The floor price may differ for the same collection across a number of platforms, meaning that if the floor price of a collection on OpenSea is 0.2 ETH, it may be lower or higher on X2Y2.
Though this isn’t always the case. Generally this occurs when a project fails to list all the NFTs on each platform.
How is floor price determined?
As a rule of thumb: the more popular an NFT collection, the higher the floor price. It’s really just a matter of economics. This is why BAYC, CryptoPunks, Moonbirds, and Azuki all have floor prices in the tens of thousands.
It isn’t out of the ordinary for scammers and market manipulators to buy up a substantial portion of the supply then flip it for a profit when new collections are released. This is a problem that has plagued the NFT and crypto world for years now.
Their tactic is pretty rudimentary: Buy up hundreds of NFTs in a collection, which triggers hype in the overall community as the floor price skyrockets. As the floor price increases, people experience FOMO and buy in, thus increasing the floor price to new highs.
Then the bad actors sell all their NFTs for a profit, leaving the average Joe with a worthless NFT.
Thankfully, there are ways to spot and avoid market manipulation.
How to avoid floor price manipulation
When a newly minted project is announced, it’s common for a single buyer or a small group of people to buy most of the NFTs to aggressively jack up the price up and increase the project’s demand. This is called “sweeping the floor” by investors and NFTs enthusiasts.
If you want to avoid getting involved in any project or collection with this issue, follow these tips to identify the warning signs before making a mistake:
- Review the transaction history of the NFT you want to buy on a blockchain explorer like EtherScan.
- Research social media platforms the project uses to inform its users and to promote the project (Tiktok, Twitter, Facebook, Instagram)
- Join their Discord and Telegram groups to see how legitimate the project is.
- Research the creators and project promoters to understand their goals and intentions with the project.
If you follow these tips, you’ll be more aware and cautious before investing in an NFT project.
Wondering “what is floor price NFT?” It refers to the lowest price you can pay for an NFT in a specific collection. It’s usually the same for a collection on various sites like OpenSea, LooksRare, or X2Y2, but it varies across all collections.
To calculate an NFT’s floor price, you have to find the lowest-priced NFT in the collection you’ve got your eyes on. If someone buys that NFT, the next lowest-priced NFT sets the floor price.
Avoid being part of any scams or price manipulation by researching the NFT project you’re interested in, checking the transaction history of the NFT you want to buy, and joining the Telegram or Discord group of the project.