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Valuations can be obtained through Chainlink NFT floor price feeds. They provide conservative and risk-averse floor price estimates for NFT collections that eliminate extreme price outliers and are resistant to market manipulation. These price feeds use a method called Adaptive Percentile Prediction to predict what price the 5th quantile of sales will fall under in the proceeding 24 hours. To construct the quantiles, outliers that are larger than three median absolute deviations are excluded from consideration. These predictions are powered by a PID (proportional-integral-derivative) controller that is parameterized via backtesting. If the error of the predictions diverge during production, the parameters of the PID can be tuned by conducting additional backtesting and feeding in the error rate.
Chainlink NFT Floor Price feeds update under two conditions, whichever occurs first:
- Heartbeat: An average of 15 minutes has passed since the last oracle update, with 99% confidence of an update in the last 30 minutes.
- Deviation: The prediction has changed by more than 2% since the last oracle update
This pace of price updates is well-suited for low leverage applications such as sales and lending.
The most important feature of Chainlink NFT Floor Pricing Feeds is that they reflect the constant availability of on-chain prices. This helps enable margin calls and thereby the ability to offer indefinite-term loans.