There are so many misconceptions running around about "duh NFT space" that I'd have trouble fitting them all into a group of articles. Let's touch on the most prevalent bullshit, floor price.
I assume you know what floor price is. If not, here is a short definition.
Now on to the important stuff — what FP can actually help you do in NFTs and what is a false narrative from parrots just repeating something they heard.
What Floor Price is Gut For
FP is good for:
1. seeing what you can sell 1 NFT for immediately if you're the next seller
2. quickly judging, in general, a project's popularity
3. borrowing against immediately on non-liquidatable lending platforms like NFTfi
What Floor Price is Nicht Gut For
1. multiplying with the number of items in a project to get a total market capitalization 😆
2. determining a project's longevity/health
3. making a plan on what you'll sell your NFT for at some unknown time in the future
4. determining a buy/sell price for multiple transactions
5. determining the value an NFT
6. replacing ownership of an actual thing
The Issues We Should All Have with Floor Price
FP is one of the easiest attributes of a token to manipulate. Imagine an order book with only 10,000 total shares. Would you take that order book seriously in any calculations of the value of the business lying underneath it? I certainly hope not. Because with a couple of buys or sells, an unscrupulous individual could add or subtract millions worth of "value" from the business in seconds.
Floor price is also an incredibly bad indicator of what you can actually sell an NFT for. A collection such as this one may have an FP of more than 0.1, but if you look at the activity, you'll see that nothing's been sold from there in more than 3 weeks. Here's another by the same artist. She's a top SELLING artist with more than $4 million NFTs sold, but try to flip, and you're going to find yourself at the disappointing end of a very illiquid market, regardless of the floor price you see.
Trading volume is infinitely more important than floor price when looking at flipping or selling NFTs.
There are also many NFT lending/borrowing/liquidity platforms being built on top of the concept of floor price. This is dangerous, as a floor price can be manipulated easily by a single unscrupulous actor — even top collections. Platforms like NFTfi have already created a usable P2P lending experience that does not include liquidations based on floor price.
I would stay far away from using any platform that allows your collateral to be liquidated based on the floor price of an NFT collection.
You must also be extremely wary of "influencers" who use floor price as an indicator of a project's popularity. Not only do they manipulate this FP for exactly that purpose (buy their own shit to pump the FP, then dump on you, the real buyer), but they can even use it to scare up VC funds. Yep, it's not only dumb money that gets fooled by this shit. The smartest supposed investors in the world work off this faulty reasoning to engage the NFT market as well.
They can do that, though. They have the liquidity to move markets to their benefit, while you don't.
Just some things to consider. If you really want to learn how to trade NFTs profitably, and you want to get involved in projects that actually mean something, my Twitter will definitely help you.
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