# NFT Appraisal

## The problem with floor-based appraisals

The value of an NFT is not always the result of an objective calculation; it is usually linked to changing characteristics such as rarity, trends, or utilities that can be enjoyed by the holder of the NFT.

This makes giving a universal, exact value very difficult.

The current solution is simple and unsatisfactory: valuation is obtained based on the floor price of each collection. The value given to each NFT is related to the lowest price recorded for a specific collection.

This detrimentally impacts all users, resulting in limitations on LTV since lenders will be willing to lend less capital and the APYs to be paid for erasures will be very high, creating a highly inefficient and illiquid market.

This methodology is a direct contradiction to the NFT ecosystem itself. As the name says, Non-Fungible-Token should be valued independently.

## Unlockd's Appraisal Model

Our appraisal mechanism relies on several third-party tools specialized in solving the valuation problem, with whom we are proud to work as official partners.

They appraise each NFT individually, according to different models, input variables and Data Science techniques.

Their data (prices and error bounds) flow into our system to then be incorporated to our [Dynamic LTV Model](/unlockd-v1/protocol-mechanics/dynamic-loan-to-value.md), which yields the final amount that is allowed to be borrowed.

These partners generate the price prediction in 2 different ways:

{% content-ref url="/pages/yuzP3ckhCB5vuLRA14R1" %}
[Algorithmic pricing](/unlockd-v1/protocol-mechanics/nft-appraisal/algorithmic-pricing.md)
{% endcontent-ref %}

{% content-ref url="/pages/thMus2BjpcPwrVSKeb3d" %}
[Crowdsourced pricing](/unlockd-v1/protocol-mechanics/nft-appraisal/crowdsourced-pricing.md)
{% endcontent-ref %}


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