NFT Glossary Deep Dive: Floor

NFT Glossary Deep Dive: Floor

Ellen Britt for CNT #NFT

When you see the term “floor” as in the floor price of a collection, it means this is the lowest price for which you can purchase an NFT from that collection on the secondary market.

A price floor is actually a term that was borrowed from the commodities market. In that case, a price floor is referring to the price controls that are set by various groups or governments to establish the minimum amount a seller can charge for a commodity, good, or service. Floor prices are set up to discourage a race to the bottom and will often help a certain industry.

A Hot Project Will Have A Rising Price Floor

The price floor is a tangible piece of data that is attached to an NFT project, but because a hot project will likely have a rising price floor, it really doesn’t say much about the viability of the project. This is because speculators often tend to bid up prices hard.


 

The Market’s Weakest Hands

There is also an apparent social meaning behind the price floor, as it stands for the market’s weakest hands, meaning it’s the lowest price at which an individual seller is willing to undercut other holders. Community influence also weighs in on whether a seller might be persuaded not to sell at a particular price.


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By Ellen Britt

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