Key Metrics - Under Construction

Coming soon

We have spent many years buying and selling NFTs before creating our own project and here are some great tips when researching potential P2E investments.

NFT Evaluation Metrics

1. Floor price

What is it?

In the NFT space, the floor price is the lowest-priced NFT within an NFT project.

Buying the floor is considered a good starter strategy since it's an approachable entry point for new people joining an NFT project.

Why is it important?

The floor price is a good metric for evaluating how well an NFT project is being received by the community. As demand increases, the floor price will increase.

So if you buy the cheapest NFT in a collection with the expectation that it will become more popular, you can then resell the NFT when the floor price is higher.

A good goal is to find a project that balances high value and accessibility. Although projects with higher floor prices are worth more, they are more difficult for smaller traders to afford.

2. Ceiling Price

What is it?

The cost of the highest-priced NFT in the collection or the highest price that an NFT was sold for.

Buying the ceiling can be considered a high-risk, high-reward NFT trading strategy.

Why is it important?

If you are willing to spend a lot of money into NFTs, look into buying ceiling NFTs. Those are usually the rarest and most popular digital assets that sell for the highest prices.

If demand for the project increases, the price of ceiling NFTs can skyrocket. But, if the project loses appeal, investors looking to sell can take huge losses as liquidity dries up.

3. Volume

What is it?

This metric refers to the total volume traded and shows the overall demand for the project.

Generally, established collections have high volume traded values.

Why is it important?

The volume traded is a good indicator of how popular an NFT collection is. For a collection to attain high volume, people must be willing to buy and sell.

By looking at the total volume traded, you can easily determine whether an NFT project is currently in demand. The higher the volume, the more liquid the market tends to be. You want a liquid market so that you can easily enter and exit NFT positions.

4. Supply

What is it?

Supply refers to the number of NFTs in the collection.

Why is it important?

Essentially, each NFT creator controls the supply of their work and its inflation rate.

The supply of NFTs affect how the value of a collection is perceived. Collections with high supply tend to have a lower market value for each NFT. Collections with low supply often have higher floor prices due to the rarity and scarcity of each piece.

5. Sales

What is it?

The number of NFT sales helps investors identify past and present interest in an NFT collection.

Why is it important?

If an NFT collection shows many recent sales, it could be a sign that there is increasing interest. However, you need to consider the direction of the movement in relation to the floor price. If many NFT holders are selling and the floor price is going down, it may indicate decreasing interest or even panic selling.

6. Rarity Rank

What is it?

The rarity of an NFT is determined by the traits and characteristics the NFT possesses within a given collection. This metric can also translate to how hard to get a specific NFT is.

Why is it important?

Rarity rank is a metric that helps investors assess how valuable the NFT in each collection can be.

Following the law of scarcity, rare and in-demand NFTs often attract more buyers and sell for higher prices. Moreover, NFTs with a higher rarity rank might come with additional exclusive NFT utilities, such as more benefits in play-to-earn games that gamers can benefit from.

7. Provenance

What is it?

In the NFT space, provenance can be defined as the history of ownership behind an NFT starting from its origin.

Why is it important?

Provenance is an important metric used to evaluate NFTs because it enables you to verify changes in ownership information through the blockchain. Your investment is protected because only one original can be traced back to the original creator.

8. Smart Contract

What is it?

Smart contracts are an application or program that runs on a blockchain. They are an important part of NFTs because they make it possible to sell or transfer a digital asset, set royalties for artists, let users interact in the metaverse and more.

Why is it important?

Smart contracts can outline the rights of the owner and the purchaser. As well as preserve the supply chain or transaction history.

In terms of preserving the supply chain, the preconditions required by smart contracts are tied to the original creator and the purchaser. While buyers take ownership, they will not necessarily possess the copyright to the NFT. Unless it is part of the contract's stipulations, the copyright remains with the author.