From summer 2021, the NFT market has been skyrocketing, and it does not plan on stopping anytime soon. This led to more and more people joining the NFT space. However, when you look at a completely new market for the first time, it might confuse you a bit… or a lot. The NFT space has lots of phrases and terms that are not usually used anywhere else. Such a term is Floor Price (FP).
What are NFTs?
Before getting into what Floor Price is, we will briefly touch upon the question of what NFTs are. The word NFT stands for a non-fungible token, the opposite of a fungible token. Unlike fungible tokens such as Bitcoin, Ethereum, Cardano, or Dogecoin, NFTs cannot be traded with one another as if they are equal in value. This is because each NFT is a unique smart contract and has its specific slot on the blockchain.
The history of NFTs goes way back, however, we will only talk about the ERC-721 token standard. This token standard shaped the NFT space we see today. But before this standard came into existence, Larva Labs did the unthinkable. They became the first-ever agency to create an NFT collection of 10,000 unique art pieces. In 2017, the CryptoPunks collection made its debut. So, the CryptoPunks was the inspiration behind the ERC-721 token standard. We must note, however, that CryptoPunks is the first NFT collection, not the first NFT. The first NFT is Quantum and it was minted in 2014.
Today, we have several blockchain networks that support NFTs and smart contracts. Currently, the ones with the highest trading volume are the Ethereum network, the Cardano network, the Solana network, the Elrond network, and the Terra network.
Read More: What are NFT’s (Non-Fungible Tokens) – A Definitive Guide to NFTs
What is Floor Price?
So, what is floor price and what function does it have? Well, the name is pretty self-explanatory. Floor Price represents the cheapest NFT in an NFT collection. Sometimes, people use the term Entry Price, which technically means the same thing as Floor Price.
To make this easier to grasp, think of an NFT collection as hoodies that belong to the same brand. When you go to the store of that brand, you will have many different options to choose from. However, though, some of the hoodies of that same brand are rarer and have different expensive traits. Therefore, not all of the hoodies have the same price, even though they serve the same purpose. This is the same with NFTs from the same NFT collection.
So, the Floor Price represents the cheapest hoodie of the brand you like, just as it represents the cheapest NFT from the collection you like.
For example, at the time of writing, the Floor Price of the Bored Ape Yacht Club (BAYC) collection is Ξ100 (Ξ stands for Ethereum). This means that the cheapest Bored Ape in the BAYC collection is $289,000 or Ξ100 with Ethereum’s current price. You must keep in mind that even the Floor Price is volatile, meaning that it can drop or rise unexpectedly.
- The NFT market has been unstoppable throughout the past three months.
- NFT is short for a non-fungible token. Such follow the ERC-721 standard – an Ethereum token standard that took inspiration from the CryptoPunks collection.
- Today, we have NFTs operating on several blockchains including Solana, Cardano, Terra, and Elrond.
- Floor Price (FP) is the price of the cheapest NFT in a collection. People sometimes refer to it as Entry Price.
- This does not mean, however, that all of the NFTs of a particular collection can be bought at a floor price. This also does not mean that the Floor Price cannot change.