How Much Should we Care about NFT Floor Prices?
NFT traders very often refer to the Floor Price of a given collection as the benchmark for the broader collection's value. But is the Floor Price a useful measure?
Research on Floor Price and Transactions
Summary
NFT traders often refer to the Floor Price of a given collection as the benchmark for the broader collection's value. But is the Floor Price a useful measure? A study of historical NFT transactions shows that Floor Price is a strong measure of subsequent transaction volume with important exceptions.
Research Methodology and Data Source
In order to study the question of Pricing and Valuations we dig into historical transactions for a given NFT collection as compared to their floor price. To do so we used NFTGo.io’s API for floor price and history of transactions.
The NFT market is far too idiosyncratic and fragmented to have the perfect data source, but NFTGo.io appears to have access to a wide range of marketplaces (OpenSea, LooksRare, x2y2, other smaller ones) and thus the best history of actual transactions.
An important caveat is nonetheless that this data is far from perfect as buyers/sellers have significant economic incentives to avoid major marketplaces. Namely—fees and royalties. In the case of Bored Ape Yacht Club, sellers on OpenSea pay 2.5% in fees and 5% in BAYC royalties on the value of each sale. For a token worth into the hundreds of thousands of dollars this represents clear incentives to avoid major marketplaces for transactions.
By way of example, NFTGo reports 66,810 BAYC transactions (excluding ‘Mint’) comprised of 39,974 ‘Transfers’ and a smaller 26,834 ‘Sales’ through time of writing. There is no doubt that many of those ‘Transfers’ are in fact sales not captured by the API, though even on Etherscan it is difficult to find ETH or other tokens exchanged on the same transfers (we tried).
Another important caveat is that there is no single source of truth for an NFT Floor price, and indeed this seems slightly problematic in our data below. By definition the NFT Collection Floor Price is the lowest Ask price for an NFT within that set. But given multiple market places and largely off-chain pricing data we can't be certain we always have the true Floor.
With these caveats in mind we take a hard look at the utility of Floor Prices across major NFT collections.
Do Floor Prices Matter? Most of the Time, Yes
Our data shows that at least 50% of all NFT sales occur within 10% of the floor price across major collections.
Sales are especially concentrated for Blue-chip NFT collections such as Bored Ape Yacht Club where 50% of all transactions occurred within 0% and 10% of Floor Price.
Vast Majority Bored Ape Yacht Club Sales Occur Near Floor Price
Lower 25th percentile of sales marked by purple line. Upper 75th percentile of sales: green.
Bored Apes were the most concentrated around Floor Price—perhaps not surprisingly given they have among the most overall sales and the greatest dollar value in total volume. The available data on Cryptopunks is disappointingly thin and colors our analysis. But for the top volume "profile pic"/PFP collections we see strong concentration of tokens with average sales within 20% of the collection Floor Price.
The table below shows the number of sales we analyzed and sale prices relative to Floor price. The “Sales within XX%” shows us the number of sales which occurred within XX% of the Collection floor price. The column “Tokens Within XX%” shows the percentage of tokens which had an average sales price within XX% of the Collection floor price.
BAYC
26,812
52%
75%
60%
78%
Doodles
24,028
49%
74%
65%
81%
Mutant Ape Yacht Club
25,766
49%
73%
64%
80%
VeeFriends
4,606
45%
67%
49%
68%
Cryptopunks
4,888
43%
62%
48%
65%
Moonbirds
10,654
40%
66%
55%
76%
Decentraland
14,716
37%
54%
48%
63%
CloneX
11,144
32%
51%
42%
58%
Azuki
28,464
31%
54%
59%
80%
Otherdeed
58,914
27%
42%
31%
44%
Can we Accurately Evaluate a Collection's Value via its Floor Price?
On-chain data for top PFP collections shows the vast majority of NFT sales occur within 20% of Floor Price. For especially high-value collections such as BAYC, Cryptopunks, Doodles, MAYC, VeeFriends, and Moonbirds nearly 70% of all sales occur within this margin of Floor Price. For individual tokens of the same NFT Collections we saw 74% had average sales prices within +/- 20% of the collection Floor. We can thus claim the Floor Price is a fair valuation of one of these top NFT collections.
What we cannot claim however is that Floor Price is an accurate measure of value for lower-tier PFP or non-PFP collections. Notably in the table above and charts below we see the Floor Price is a poor measure of value for Otherdeed and Decentraland virtual land plot NFT's.
Intuitively this makes sense: in the real world we never claim the price of an acre of land in a rural or remote area devoid of natural resources is an accurate measure of value for real estate within a given country. For 'metaverse' real estate the same rules apply.
View below for full charts and collections studied.
Historical NFT Collection Sales as Compared to Floor Price
The charts below show tokens within the top 25% of average selling prices as green, tokens within the bottom 25% of selling prices as purple, and the balance (middle of the range) as blue. We do this to show whether high-value NFT’s become ‘floor’ NFT’s or vice versa. In general we see impressive consistency within that band.
Similarly the green and purple lines on the histogram and distribution chart show the top and bottom 25th percentiles for each, respectively. Or in other words, 50% of all tokens fit within those bands. In all plots we hide the top 99th percentile of sales/tokens in order to improve visibility on the charts.
Bored Ape Yacht Club Sales versus Floor Price
BAYC is unsurprisingly the most complete dataset available via NFTGo’s API’s. It likewise has the closest transactions to the collection floor price of any of the blue chip PFP collections. 50% of all transactions occurred within 0% and 20% of the Floor price with a long tail higher.
Via the Bored Ape Yacht Club and other top-value collections we see a strong link between liquidity/transactions and distribution against Floor price.
Doodles NFT Sales Against the Collection Floor Price
Doodles is another PFP NFT collection with especially concentrated sales around the Floor price. Again this makes a certain amount of sense--it ranks as the 10th-most valuable NFT collection on the Ethereum blockchain as measured by all-time USD Sales volume. There is notably a meaningful contingent of tokens which consistently sell well-above floor price, however. Arguably this is indication of an especially passionate following.
Mutant Ape Yacht Club Sales versus Floor Price
Mutant Apes have some of the best liquidity in the NFT market, and that liquidity seems especially concentrated around the floor price. It ranks third to only Bored Ape Yacht Club and Cryptopunks for top Ethereum-based NFT collection in USD sales volume. Here we nonetheless see Floor price was a poor predictor of sales during sharp crypto market volatility in late-May, 2022. The Floor Price dropped far faster than the average value transacted within MAYC NFT's.
Cryptopunk NFT Collection Sales versus Floor Price
Cryptopunks are disappointingly thin on NFTGo as data on the same collection starts only in February, 2022. It debuted in 2017 and we widely recognize it as the first major PFP NFT Collection--second only to Bored Ape Yacht Club in all-time USD sales volume among Ethereum-based NFT collections.
From what data we do have we see it behaves similarly to other top PFP NFT collections with long tails to the topside.
Azuki Sales versus Floor Price
The very sharp sell-off in Azuki in May (coincident with a drop in ETH) makes it one of the longest-tailed distribution collections in our sample. As with Mutant Ape Yacht Club we see that Floor Price is perhaps a poor measure of collection value during heightened volatility--the average value transacted far exceeded the collection Floor.
VeeFriends Sales versus Collection Floor Price
VeeFriends has a passionate following but lower trading volume than other PFP NFT Collections measured. Perhaps as a consequence we see unusually long tails to the topside--a quarter of all sales occurred more than 30% above the collection Floor price. And indeed that proportion remains relatively steady over time.
Moonbirds Sales versus Collection Floor Price
Moonbirds is a popular but still-young collection with two notable periods of volatility--its tremendous ascent following launch and a sudden decline in early August, 2022. In both instances the Floor price was a poor predictor of actual sales price, and this reinforces similar findings seen in Mutant Ape Yacht Club and Azuki--Floor is a poor predictor of transaction value in times of strong volatility.
Clone X Sales versus Collection Floor Price
Clone X is another collection in which we might claim the Floor is an unusually low estimate for the average price of a Clone X token. There is still well over a majority of tokens which sell within +/- 20% of Floor, though Floor may be a low estimate for the aggregate value of the Clone X collection.
Otherside Otherdeed NFT Sales versus Collection Floor Price
NFT Collection Floor Prices are very poor predictors of transaction value for Yuga Labs' Otherside virtual land plot Otherdeed NFT's. This makes sense intuitively--we rarely if ever refer to 'Floor prices' of real estate values across a country. The value of individual real-world land plots depends heavily on location and resources, and in this regard 'the Metaverse' is certainly no different.
Notably the distribution in sales prices of Otherside Otherdeed NFT's seems bi-modal. The plurality of transactions does indeed occur around the collection floor price (+/- 20%). But we likewise see another significant and fairly consistent grouping around 600% of Floor Price. We will explore this further in a subsequent Research paper.
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