An NFT’s floor price is an indicator for the lowest amount of money you will need to spend to buy an NFT from that specific collection. It’s something that people who constantly deal in NFTs look towards as an indicator of a project’s success. It’s also something that is heavily fixated upon on a daily basis. But the truth is, we need to get over it. It really doesn’t matter.
Floor Prices and NFT Culture
Recently here at MSQ, we penned an article on NFT Culture Sucks - 5 Ways We Can Make It Better. This article got me thinking about floor prices in general. Due to the nature of NFT trading, the majority of people are short-term speculators. While collectors and people who are “in it for the art” are definitely out there, their voices are drowned out by those in different communities that are just looking to make a quick buck.
Even as a metric for tracking NFT prices, floors are not a good indication of the health of a collection. A collection’s floor price doesn’t necessarily guarantee whether there is actual liquidity on both sides of a trade. Other metrics like listings over time or subjective analysis such as community sentiment, a project’s technical capabilities, and a project’s delivery are just one piece of the puzzle.
However, it’s clear that the average NFT trader obsesses over floor prices. This has also spawned the creation of tools that traders utilize when trying to determine what projects they should “invest”. For example, Icy Tools shows users a detailed chart on NFT sales for specific collections over a 24-hour period. In addition, users can create custom watchlists. Is your favorite NFT influencer about to shill the 5th goblintown derivative of the month? Well, if they are, you’ll be one of the first to know about it…
What this leads to is Discord servers filled with speculators looking to flip NFTs, undercut one another, and complain that the project team isn’t delivering updates and features “fast enough,” which translates to, “When are you going to make me rich?”
It’s a shame, because we set the vibe and tone of our space with our actions. It also reflects poorly on the innovation taking place in our space when everyone outside of Web3 and NFTs looks over the fence and sees a room full of “crypto bros” bragging about gains, trying to flip NFTs, and making fake TikToks saying, “This is how I turned $500 into 40K!” (Which basically amounts to them buying an NFT from a random collection and then listing it for 20 ETH).
And so understandably, people on the outside see this and associate NFTs with scams and a predatory environment. It’s not a good look, and we need to move away from it.
This is a shared problem within our space, and it doesn’t just start with short-term NFT traders. It’s also driven by multiple projects that are pushing the wrong ideals. For the record, any project that is pushing its community to list their NFTs at a certain value for “perks and utility” is a major red flag. Any project telling you that they have BAYC vibes or are the next NFT bluechip are also things to avoid.
From a project’s perspective, the attitudes in the community trickle from the top down. If you focus on creating a project based on an artificial floor price, then you really can’t complain when your entire server is filled with people driven by nothing but greed.
Co-Founder of BAYC, Greg Solano , stated that focusing on floor price is a “loser’s game.” The things that really matter are the community, the utility, and the experiences you deliver.
Let’s look back and recall that multiple projects minted and sold out 10,000 piece collections. Pixelmon raised over seventy million dollars from sales and secondary volume. Seventy million dollars is enough money to develop a triple-A game, a merchandise arm for your business, and still have funds left over.
The problem with always looking at the floor is that you can never look ahead. Decision-making is often near-sighted and only focused on raising the speculative value of a collection. We need to get back to the fun. However, just as the general crypto space is filled with bagholders, shillers, and influencers…it’s understandable that NFTs naturally fell back into similar behaviors.
I know it’s a very tall order to change the mindset of an entire industry, but we need to start somewhere…