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NFT Price Floor

Frequent Asked Questions

What is an NFT?

NFTs are cryptographic tokens - data units stored in a blockchain - that represent a digital asset that it is unique and, therefore, not exchangeable for another equivalent.

The acronym NFT stands for "Non-Fungible Token". In economics, fungible goods are those that, like fiat money, are defined more by their value than by their unique properties. A 10 dollar bill is interchangeable for any 10 dollar bill, one may be more worn than the other, but for practical purposes, they represent the same thing.

This does not happen with other items such as furniture, real estate, art or collectibles, which do have unique properties. Of this type of goods, we say that they are non-fungible.

NFTs are a perfect instrument to tokenize -represent ownership on the blockchain- of all kinds of unique items such as digital collectibles, works of crypto art, parcels of land in metaverses, video game items and wearables, and even real-world goods -e.g. real estate properties, traditional art, etc.

Why is the concept of "Price Floor" important for NFTs?

Unlike fungible tokens such as ETH or BTC, NFTs are non-fungible cryptographic tokens that represent goods with unique properties, so each one will have a different price.

However, at any given moment, the supply side of the NFT markets representing sets and subsets of digital collectibles, generative art drops and other forms of crypto art tends to converge -from a price discovery point of view- on a common ground -the lowest ask price- that we call "price floor".

At NFT Price Floor we believe that the price floor concept will become increasingly relevant to the non-fungible token space, as revealed by interesting initiatives that bridge the world of digital collectibles/crypto art with DeFi. Predictably, AMM liquidity provision services via ERC20 index tokens, and lending services that allow the use of NFTs as collateral will also give a boost to the price floor concept on the sector.

Obviously, the usefulness of the price floor concept is closely linked to the level of granularity offered with regards to the data of each collectible set or crypto art drop. We are very aware that for certain NFTs, with abundant series and subsets, presenting a general price floor is not as useful as for those that are more homogeneous. For that reason, we will continually work to gradually increase the granularity of our data.

What is the Floor Cap?

As we already mentioned, the concept of "reference price" applied to a set of NFTs - e.g. digital collectibles, crypto art drops - is controversial, due to the fact that each token represents an asset with unique properties and, therefore, a different price.

Still, the lowest current ask price -price floor- can be a very useful metric for all those emerging financial applications that aim to bridge the NFT space with the DeFi ecosystem.

If we accept the possibility of using a price floor as a reference for a set or subset of NFTs, the next logical step is to obtain a market capitalization - as the result of multiplying said price by the total supply. Given that the price we use as input is the price floor, we can consider this specific type of market cap a Floor Cap.

About us

We, the NFT Price Floor team, are a bunch of anon enthusiasts of the digital collectibles, crypto art, gaming and metaverses. We believe that NFTs have enormous potential to empower participants of the new Creators Economy, and revolutionize the distribution and monetization of all types of digital content.

It's our believe that having good metrics for the NFT markets is paramount, and since we were not satisfied with any of the existing options, we decided to create our own website ๐Ÿ˜Š