What is a Floor Price?
Let me start with the question: What is a Floor Price?
A floor price is the lowest price of an item in a collection of items with limited supply. To better illustrate, recently with the NFT craze and millions of dollars being won and lost trading NFT’s of apes and punks, understanding floor price became super relevant to making or losing fortunes. To further illustrate how a floor price works I will explain the NFT example in further detail. A collection of Punk NFT’s created and there is a limited supply, in this example, we will say 100 punks in this rare collection were created. The NFT project now has a lot of interest and prices are taking off. Initially, all prices started at 2 eth but now prices have increased significantly. Out of the 100 rare NFT’s that were created, the cheapest of all 100 is being sold for 50 eth, and ALL others are being sold for at least 20 eths more. In this case, the floor price would be 50 eths.
Web3 Speed and understanding
With cryptocurrency and blockchain, it’s been said that everything moves 100 times faster than normal business. IT IS CRITICAL TO FULLY UNDERSTAND THE PRICING FLOOR! Let me say that again, IT IS CRITICAL TO FULLY UNDERSTAND THE PRICING FLOOR! If interest increases and the floor jumps but you are priced at the bottom, you will sell for under-market value. If you are buying and don’t understand the current floor price, you may overpay. With Handshake, we are working on gathering, accumulating, and updating our analytics to understand, establish, and share floor pricing to help everyone make informed decisions when investing in Handshake Domains.
Profits in arbitrage:
What is Arbitrage? Arbitrage is the practice in investing where you purchase the lowest price investment in a category and immediately re-list the item for a profit. If you know the floor price, there is only an upside. Profits were taken routinely by savvy NFT investors by keeping track of floor prices with Apes and Punks. Once the secondary market was established, a whole new breed of investors jumped in and routinely purchased the floor only to raise the floor price and sell for a profit. The market is currently ripe to make those 100x returns simply through arbitrage!
HNSLIST Roadmap and Floor Price Tracking
In the next few days and weeks, we will be adding analytic data regarding the floor price and listing the top 100 deals of the week. Handshake Domains have a few categories with high early interest. 2 letter/digit, 3 letter/digit, 4 letter/digit, and single emoji names currently have a lot of interest and have been trading for thousands to hundreds of thousands of HNS. Recently the crown emoji domain sold for 777,777 HNS or roughly $55,000 USD at the time of sale. This sale set a new ceiling price for emoji domains. After this sale, floor-priced emoji domains quickly began to get snatched up and the floor price has been rapidly increasing.