Interview with the Founder of Floor Protocol: The Value of NFTs Must Be Precisely Reflected Through Frequent Trading
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Interview with the Founder of Floor Protocol: The Value of NFTs Must Be Precisely Reflected Through Frequent Trading
Only after a sufficient number of transactions will the price of an NFT return to its value and find its rightful owner.
Navigating Web3 tides with focused insightsInterview: Jack, BlockBeats
Compilation: Joyce, BlockBeats
Two weeks ago, a mechanism update by NFT fractionalization protocol Floor Protocol triggered several days of market collapse in the NFT space. The incident made the market realize that Floor Protocol has already gained the power to influence the entire NFT ecosystem.
In an exclusive interview with BlockBeats, Free Lunch Capital, founder of Floor Protocol, shared his views on NFTs and their trading markets. Floor Protocol is exploring viable ways to balance the cultural and financial attributes of NFTs during transactions—a reflection of the founder’s deeper philosophy. Free Lunch Capital believes only through sufficient transaction frequency can NFT prices converge toward true value and eventually find their rightful owners.
Born at the Bear Market Bottom: The Rapid Rise of Floor Protocol Amid a "Crash"
On December 31, 2023, Floor Protocol published its first article on its Medium channel, titled “Revolutionizing NFT Trading: Introducing µToken/FLC Pairing on Floor Protocol.” It announced the launch of a groundbreaking new model in January 2024—linking the price of governance token FLC to valuations of mainstream NFT collections via µTokens. What followed was beyond the team's expectations.
BlockBeats: Please introduce the Floor Protocol team.
Free Lunch Capital: Before entering crypto, I worked as an engineer at Google. After transitioning into crypto, I co-founded a quantitative trading firm with former Google colleagues, which performed well enough to allow me to invest in NFTs. Once immersed in the NFT space, beyond enjoying its vibrant community culture, I realized it remains a very primitive field. There are abundant trading opportunities—even outdated models can generate profits here.
While still at my previous trading firm, I repeatedly pitched the board to explore NFT trading, but was consistently rejected. The main reason? Poor liquidity in the NFT market makes it hard for large capital to enter or exit. Without significant capital inflow, the ceiling for NFTs will always be capped. That’s why I decided to build a project designed to enhance NFT tradability.
I had this idea since early 2022 but didn’t have time to act on it until June 2023, when I stepped down from my role as CTO to fully focus on Floor Protocol. We were lucky—the week Floor Protocol launched marked a local bottom in 2023. Since then, blue-chip NFT prices have gradually recovered. It’s unclear whether Floor Protocol breathed new life into the NFT market or simply rode the wave of a recovering bull cycle.
Currently, nearly all product design and development has been done by me alone. We’re now expanding the team—already three to four times larger than initially—but still too small relative to our valuation. As FLC’s price rises, we’re actively hiring. We hope our team growth keeps pace with price appreciation. At its peak, Floor Protocol’s FDV exceeded $500 million. Honestly, sometimes I feel undeserving. All we can do is keep building, keep hiring, and deliver innovation.
BlockBeats: How did FLC empowerment trigger the NFT market crash?
Free Lunch Capital: When news emerged directing liquidity toward the FLC pool, many rushed to buy FLC, anticipating further positive developments. When those didn't materialize quickly, they sold off, transferring selling pressure onto NFTs. As FLC dropped, arbitrage opportunities opened up. Some NFT selling pressure was absorbed on Blur, where farmers sensing continuous sell-offs lowered their bids, triggering liquidations of NFTs on Blend.
Fortunately, there was no widespread liquidation. The decline didn’t reach BendDAO’s liquidation threshold. Moreover, someone picked up a significant amount of BAYC at 22 ETH, halting the downward spiral.
BlockBeats: Did the team anticipate FLC’s price movements? Were you aware such volatility could ripple through the NFT market when linking FLC with µTokens?
Free Lunch Capital: My initial expectation was that Floor Protocol would go unnoticed at first, gradually gaining attention over time. We never set specific targets for FLC’s price—we don’t fully control it anyway. For instance, on the day the Uniswap liquidity pool went live, traders who chase new launches noticed FLC, treated it like a meme coin, bought aggressively, and drove its price up 15x overnight—an outcome completely unforeseen.
The design of FLC isn’t meant to push the NFT market into perpetual bull territory, but rather to introduce a self-correcting mechanism. If the system doesn’t spiral endlessly downward and instead reaches a new equilibrium, I consider the mechanism successful.
During this recent FLC-induced volatility, we observed strong recovery among blue-chips like BAYC and Azuki. Some collections, like Pudgy Penguins, were barely affected. This shows resilient NFTs have strong self-recovery capabilities—exactly what we designed for. We envision FLC as an NFT index: each price swing is a wave, and only those NFTs surviving multiple waves earn higher weights in the index. Strong projects maintain tight correlation with FLC, while weaker ones drift away.
Focusing only on downturns captures half the story. Equally important is how quickly prices rebound. From day one, we wanted FLC’s price to move positively with the broader NFT market—and vice versa. This bidirectional linkage is crucial. If sustained, FLC itself could become a viable investment vehicle for exposure to NFT market growth.
Floor Protocol will partner with CEXs—launching on WOO X on January 23. Investors interested in NFTs and metaverse concepts but unfamiliar with NFT trading can now gain exposure by simply buying and holding FLC. Purchasing FLC injects liquidity into the entire NFT ecosystem, with stronger-performing NFTs (those more closely tied to FLC) receiving greater benefits.
Frequent Trading Is the Right Path to Accurately Discovering NFT Value
This incident highlighted Floor Protocol’s significant influence on the NFT market. Historically, NFTFi solutions have brought much-needed liquidity to NFTs—but this comes with trade-offs. While boosting trading volume, these tools often amplify financialization, potentially undermining the cultural essence of NFTs. The market needs liquidity, but not at the cost of losing its soul. How should we balance these multiple values? Floor Protocol has a clear answer.
BlockBeats: Some worry FLC might 'distort' the NFT market. Is Floor Protocol considering a correction mechanism?
Free Lunch Capital: If we treat the entire contract as a wallet, Floor Protocol holds between $40M and $55M in net value. In terms of scale, it ranks below Blend among NFT protocols—but notably, Floor Protocol surpassed Blend in net value for over a month. Project tokens haven’t been unlocked yet. If dumped instantly, over 40 million FLC would rapidly crash the NFT market. Of course, we’d never allow that. From a pricing perspective, Floor Protocol undoubtedly influences the NFT market.
Regarding “distortion,” I believe the NFT market is highly complex and multidimensional—it functions like a social network connecting people. I’ve attended many NFT events, especially around October 2022, when the market hit a prolonged low. Those still holding NFTs then were typically individuals with substantial achievements, able to afford images worth tens of thousands—or even hundreds of thousands—of dollars.
That’s why I see top-tier NFTs as multi-attribute assets: both elite social networks and financial instruments. Floor Protocol’s mission is to strengthen the asset and tradable nature of NFTs. The strongest NFT projects should be able to compete with the top 50 projects on CoinMarketCap—but without fragmentation protocols, this is nearly impossible.
BlockBeats: As NFTs evolve into ultimate trading assets, the line between them and FTs blurs. What’s your take?
Free Lunch Capital: Blue-chip NFTs like Bored Ape Yacht Club and Azuki internally split into two groups. One segment is treated as collectibles—low turnover, held long-term by collectors. The other consists of less rare or visually appealing pieces, frequently traded back and forth on platforms like Blur or OpenSea.
The latter behaves like FTs, exhibiting pure financial traits. However, due to royalties and platform fees, each transaction erodes value. In bear markets, profits from trading these NFTs are minimal. We believe parts of an NFT collection near floor price should be treated like FTs—with lower fees—to encourage circulation. Only through active trading can a collection achieve proper pricing, aligning market prices closer to intrinsic value.
If an NFT series trades infrequently—say once every few months—its displayed price likely deviates significantly from real value. Only with high-frequency trading can pricing become meaningful and sufficiently efficient, enabling quantitative comparisons across the NFT market.
BlockBeats: Beyond aesthetic appeal or marketing-driven narratives like Pudgy Penguins, what other dimensions of value do you prioritize in NFTs? How does Floor Protocol help uncover such value?
Free Lunch Capital: NFTs fundamentally differ from FTs. Last year, when Pudgy Penguins’ floor hovered around 3–4 ETH, I snatched over 150. Why? During Singapore’s Token2049, I met professionals from exchanges and VCs. In our chat group, 4 out of 5 used Pudgy Penguins as profile pictures. I realized PGPs connect holders who may not be loud on Twitter but are deeply embedded in crypto and successful. People use PGPs to identify each other and initiate conversations—something FTs cannot enable. That’s the real value of NFTs.
Take Pudgy Penguins: 8,888 total supply, but it didn’t instantly connect 8,888 people. This is evident in unique holder counts. If a collection’s goal is to gather 8,888 high-net-worth or accomplished individuals, that process takes years. Until then, most NFTs will circulate heavily—this is the NFT finding its owner.
An NFT collection either dies or succeeds—and this journey happens through trading. Floor Protocol enhances tradability. The more active the trading, the more value is recognized. A project losing trading volume faces an uncertain future.
Building on this, we’re enabling users to click into a BAYC collection and see 126 BAYCs in our Vault. If you like one, you can bid for it. Eventually, we want users to directly “buy now,” paying a slight premium to take one home. On Blur, only 4 or 5 BAYCs are available within 1% of floor price. On Floor Protocol, fragmenting these 126 BAYCs allows users to trade fractions or acquire whole NFTs near floor price. This increases the chance of matching an NFT with its ideal owner. Another benefit of fragmentation: more NFTs can be acquired close to floor price.
BlockBeats: Beyond floor price, how do Safeboxes handle pricing for rare NFTs?
Free Lunch Capital: Safeboxes let users fractionalize an NFT while retaining ownership via a Key. This separates the floor-value portion from the premium, allowing the NFT to trade at floor price while keeping the premium locked in the Key.
We plan to create a marketplace for Keys capturing NFT premiums. The vision? Premiums themselves become tradable. For example, an Azuki priced at 1.3x floor has a 0.3x premium. If bullish, a user buys the Key and later sells it at 0.8x floor (when NFT price hits 1.8x), earning 0.5x spread with only 0.3x cost. On Blur, users must hold the full 1.3x-priced NFT to speculate. For flippers, Safeboxes dramatically improve capital efficiency.
The Future of Floor Protocol
For Floor Protocol, which has grown for just over half a year, everything is just beginning. From NFT marketplaces to a novel Launchpad model and evolving thoughts on FLC utility, Free Lunch Capital holds high hopes for Floor Protocol—and some perspectives are shifting.
BlockBeats: What is Floor Protocol’s future direction?
Free Lunch Capital: On the marketplace front, as Vaults accumulate more NFTs, we aim to make Floor Protocol a one-stop hub—aggregating NFT markets to offer users the widest possible selection. Beyond that, NFT copyright has been discussed for years but rarely implemented. Floor Protocol wants to change that. For instance, a holder places an NFT in Safebox; another party purchases temporary usage rights, locking the NFT during that period. Through Safeboxes, buyers and sellers can lease NFTs for copyright use without transferring full ownership.
Regarding FLC utility, fees collected from Safeboxes will be distributed as incentives to FLC holders. Governance will expand: users stake FLC to vote on µToken liquidity pools, determining each NFT collection’s weight in FLC’s value—similar to Curve’s voting gauges. Through Floor Protocol, the NFT market will reinforce the principle of ‘the strong get stronger.’
Recently, we’re also exploring a Uniswap-based Launchpad. Currently, NFT projects must sell out their mint round to ensure good secondary market liquidity—otherwise, development stalls. To guarantee this, initial prices are set low, squeezing project revenue.
Floor Protocol aims to pioneer a new NFT launch model: sales don’t need to finish in a day. Prices rise with demand—the more bought, the higher the price. We could even split the launch: first sell µTokens (fragments), then the full NFTs. Like Binance Launchpad, FLC holders could receive whitelist spots or discounted mints during NFT launches.
BlockBeats: As NFTs become increasingly tradable, anchoring to the NFT market becomes critical. Will Floor Protocol incorporate DeFi mechanisms?
Free Lunch Capital: The priority is growing the Vault—more NFTs inside mean better mechanics. This is foundational for Safeboxes. We’re collaborating with DeFi protocols like Wasabi and Particle—whose designs go beyond 2021-era DeFi. For example, Particle explores oracle-free leveraged derivatives; Wasabi builds NFT perpetual-like products. These teams are crafting increasingly sophisticated DeFi systems. We particularly favor oracle-free contracts—they handle bad debt on-chain without relying on external data, greatly enhancing security.
To me, oracles are a transitional phase in DeFi—dependent on centralized mechanisms, which I find inelegant. We’re eager to collaborate with oracle-free protocol types.
BlockBeats: Final question: any plans for fundraising?
Free Lunch Capital: Yes, we plan to raise funds. Initially, we were stubborn—only doing a Strategic round, bringing in figures from the NFT world like dingaling and machibigbrother with small checks, then refusing further funding. But we realized VCs bring visibility and credibility. Blur earned trust beyond the NFT circle largely due to Paradigm’s backing. They highlight “We are backed by Paradigm” in every announcement. I don’t fully endorse the tactic, but it’s simple and effective. For a project to succeed, it needs the right audience watching at the right time.
For this reason, I’m gradually engaging new investors—aiming to bring in vocal, influential capital from the crypto space to co-shape the project’s future.
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