Even when you master the principle of NFT, it can sometimes be difficult to understand all the concepts around it. One of the most used terms is floor price, literally the floor price.
What is the floor price ?
A floor price for an NFT, like all other products in general, is the lowest price available in the market to obtain an NFT from a collection. the floor priceis different from mint price , which is the starting price asked to mine the NFT. Some mint price are 0 as for CryptoPunks for which you simply had to pay the gas costs, a good deal when you know that their floor price now counts in the hundreds of thousands of euros!
the floor price is a very important indicator, because it makes it possible to understand whether an NFT collection has a real community ready to invest; and not simply an NFT having a disproportionate price compared to the others. It is therefore one of the indicators making it possible to judge the seriousness of a project before investing in it.
It is theoretically possible to obtain an NFT under its floor price by offering Bids on the site like Opensea Where Rare. However, it would not be logical for the seller to accept it unless he finds himself in the emergency to liquidate his assets (perhaps as a result of a bad investment on the same corner !). In addition, bots scour NFT’s sales sites for the infamous typos, which some unfortunate salespeople have suffered recently.
What determines the value of an NFT?
The question now is how to understand the value of an NFT. Like any object, its value is relative and / or objective. Indeed, the first indicator of value is the rarity of an NFT. Once again, the CryptoPunks are extremely rare, since numbering 10,000 and having been created a few years ago. Here we find a real historical link between the price and the NFT and this is one of the reasons for its success. To better understand the history of NFTs, we invite you to consult theexcellent article from our colleagues at NFTexplained.info.
But there is also the utility, we can talk about the collection Bored Ape Yacht Club which distinguished itself by creating the first Yacht evening for the owners of its NFTs, as well as an upcoming game Play-to-Earnduring 2022. This type of utility has started to create a real trend for NFTs giving access to a club. Another example is the organization of a beach party for holders of Top Dog Beach Club, or the delivery of a collector’s item for other projects. Many projects have therefore seen the light of day, promising exclusive Discord access, parties and networking between influential people. It is good to remember that as always in the crypto universe, some projects are very serious and others will take advantage of the hypeand general excitement to sell scams.
A last more technical element is the presence of a rare asset in the NFT, in general the collections are coded and the design is done automatically by attributing certain attributes such as a color or an object in a more or less rare way. It is then possible to check the rarity of the NFT in its collection with sites like rarity.tools.
In conclusion, there are many things to take into account when investing in an NFT, whether it is to support an artist, join a private club or simply speculate on the value of an NFT. We always invite you to check the information on the collection and on the NFT in particular.
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Observer of the social, economic and financial revolution driven by cryptocurrencies, the challenge and the metavers.