# Introduction

What is Tensor's "smart floor price" and why is it necessary?

## The Canonical Floor Price

Most people are familiar with listing floor prices of a collection which are commonly published on *insert your favorite NFT marketplace*. The **canonical floor price **is the instantaneous minimum price of all active listings for a collection. It provides some notion of what the minimum price NFT sellers are seeking. The floor price has become the status quo statistic in establishing the value of an entire NFT collection (e.g., the floor market cap).

For NFT financialization use cases such as floor indices or loan collateralization, there are a number of issues with a naive listing floor price:

Subject to oracle manipulation via spoofing

A single listing (that establishes the floor) is not indicative of the broader market's intent, especially for more illiquid collections

The floor price is analogous to the ask price (in your typical limit order book): the fair price (unobservable) is upper bounded by this floor price

## Tensor's Smart Floor Price

We define our **smart floor price **as the **price** buyers are willing to pay for *any NFT in the collection*. That is, there exists at least 1 buyer who would purchase any mint $M_C$from an NFT collection $C$ at the smart floor price $P_{C,t}$, at some time $t$.

This refined definition has a number of advantages, specifically for applications in NFT financialization:

Since it's a

**robust statistic**computed from a window of historical data, it is more reliable for use cases that rely on establishing fair price, such as in*floor indices*Since we focus on a "fair price" at which there exists

**at least 1****buyer for**(rather than the price sellers are willing to sell at),*loan collateralization*can rely on this pricing as the liquidation value (perhaps with some discount)We aggregate across multiple exchanges to capture as much of the market's liquidity for a given collection

Last updated