Floor Price of NFT Projects
Floor price might be an indication of the success of a project. But what does it means?
It's been a while since I wanted to share some thoughts about floor price on NFT projects and discuss some controversies.
I want to share a couple of cases I've seen in the last couple of months and then express some thoughts.
Note, I won't mention specific projects or users because that's not the point. I'll describe some stories as examples so we can discuss them.
Don't Cut My F#*&ing Floor!
The first case I want to share is a situation that involved a user and a 1K project led by a known influencer on the NFT space a couple of months ago.
As a background, the project launched on Sep '21, and the entry cost was 0.3 ETH on a 1K collection. By that time, the ETH was around U$ 3,300.00, so the cost to enter was around U$ 900.00.
When launched, there was a reasonable volume, but soon the volume went down, as with several projects.
This project still hadn't delivered much after a year.
With a (kind of) consistent floor price of 0.15 EHT, the user listed and sold the piece for 0.109 ETH.
At this time, ETH was around U$ 3,000.00, so the sale was around U$ 170.00.
"Kind of" consistent floor price because there was little movement, liquidity, and volume to the project.
Users traded only 11 items last month with an average price of 0.095 ETH, with the lowest trade for 0.065 ETH and the highest trade for 0.1269 ETH.
The project leader kicked the user from the Discord server right after the sale.
The user then reached the project leader on a DM conversation and, ironically, laughed, saying that just by selling, he got kicked.
The project leader ranted back and asked, "what was so funny? is cutting the f*#$ing floor so funny?".
The user said back that maybe the reason was that he needed money. The project leader replied that he should have first talked to the project team but not cut the floor.
And then the project leader tried to expose him on Twitter, ranting a bit more.
Let's burn it!
The second case I want to mention is a project that proposed to their community to burn tokens if listed under a defined floor price.
For background, the project suffered a lot of fud on its launch and seemed to be a victim of intentional damage.
Part of the project involved a free mint for those who owned PFPs from a previous project.
What happened was that most of those who got the free mint started listing for below the mint price.
The mint cost of the project was 0.068 ETH, and soon the floor price of the collection went down, reaching 0.015 ETH.
That increased the fud on the project, and people stopped minting.
Interestingly, this is one of the projects I've seen delivering around 80% of the roadmap BEFORE the mint. So everything was ready from the start, part of gamification, staking, tokens, etc. Still ahead, the only missing piece is the metaverse.
To raise the project floor, apart from the giveaways and rewards to the community, one of the proposes involved burning the tokens listed below 0.5 ETH. By that time, the current floor price was around 0.03 ETH.
As a holder, I was against this proposal because I believed it would hurt the project even more, but the majority favored it. They changed the proposal for 0.1 ETH, which I was still standing against, but most were still agreeing. I gave a few reasons why I thought it was wrong.
Anyway, this rule is not implemented at the time of writing this article.
Considerations
With those two cases shared, I have the following considerations and thoughts to share:
Cost to Enter
The floor price is the cost to enter a project, not to exit, especially if there is no movement, no liquidity, and recent volume.
Floor Price vs. Liquidity
Floor price means nothing without liquidity. You can set the price you want to the NFT, but selling is a whole new story.
If there is no liquidity and nobody is willing to buy from a project, you cannot sell for the current floor price.
Forced Floor Price
Projects can try to enforce the floor price, but it's not sustainable for a long time. Again, what's the point of having such a high cost to enter if nobody is willing to buy at that price?
Attract by Utility and Delivery
The project's utility and the delivery of the promised roadmap move the interest in the project, bringing people in.
Fluctuated floor prices to attract investors, flippers, and gamblers only work when there is volume.
My NFT is MINE!
Lastly, one critical thought is that my NFT is mine. As soon as I buy, that's my option for what I list it for if I want to transfer or even burn it.
The actions of the project and vision of the future will determine what I do with MY NTF, which I bought with MY ETH when I believed in the project.
Being public shamed or threatened by a project because you are listing for any cost or doing whatever you want with the NFT seems wrong.
MΔRK MΔRROC is a photographer, artist, and NFT creator and collector. His background in IT allows him to explore the NFT and blockchain world one step further.
You can find him on Twitter at @markmarroc.
Visit: markmarroc.com
If you're interested in going one step further on the mint process, check this article on "How to Mint NFT Direct from Ethereum Contract."
https://medium.com/coinmonks/mint-nft-direct-from-contract-a1e60bd21153
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