NFT staking is a promising subsection of DeFi that offers NFT holders a chance to make an attractive passive income without ever having to sell. Each transaction made on the Ethereum blockchain or DEX is user-specific, and users can decide whether to continue holding the asset or initiate another user-specific transaction straight away.
NFTs are about to grow, and there are tons of uses for them in the future. Earn passive income with NFTs when you participate in the token sale!
What is NFT staking?
We mentioned NFT staking in the previous post, but we will go into more depth here.
If you’re interested in earning passive income, staking NFTs is a great opportunity. NFT staking is when you “lock up” an NFT either through that NFT project itself or on an external platform. In return for staking an NFT, holders earn what is known as “staking rewards.” It provides a way for holders to earn passive income without selling their brand-new virtual goods.
If you want a passive income, proof-of-stake (PoS) is a great way to generate some more capital on your investment. PoS tokens lock up your tokens for a time in exchange for staking rewards, but this looks pretty straightforward with NFTs that will passively produce an income for you.
PoS blockchains can process transactions thanks to stakeholders or holders that lock up their coins in return for an annual percentage of the transaction fee for that blockchain. One way to make passive income is through staking your tokens. NFTs offer another way to have passive income; if you have coins tethered to these, prices can grow with time.
Why stake NFTs?
One of the most significant issues faced by NFTs is liquidity. Despite being non-fungible, there are difficulties with encouraging trading these tokens more easily. Indeed, very often, an NFT’s value lies more in what someone will be willing to pay for it rather than any specific numbers. On the other hand, fungible tokens can be traded much more readily as they have a market-defined value relative to fiat currencies and other cryptocurrencies.
In other words, NFT staking is a way for holders to earn from their assets without finding a buyer. This means it solves the liquidity problem with NFTs because it allows holders to earn while they wait.
How NFT staking works
You might’ve heard about staking in blockchain-based digital assets, like Bitcoin (BTC). It has some similarities to NFT staking. NFTs can be considered fungible collectibles. Learn more about the benefits of holding them by reading below.
The rewards for staking an NFT depend on the NFT, as well as the platform where you raised them. Although Bitcoinstaking is growing, not every network offers Bitcoin rewards, so it’s worth investigating potential platforms before committing.
NFT Staking Platforms
If you are interested in staking your NFTs, check out these related sites. Not too many platforms offer this kind of service, but it is quickly growing to encompass even more collectibles.
NFTX has created a new business model. Instead of only machine owners generating revenue, they now allow any NFT holders to be part of the process by staking out their collections for vault resources. With one token representing one certificate of authenticity, they provide an asset growing every day with the number of digital assets digitized.
Staking NFTs on the NFTX platform allows users to earn passive income. Notably, V2 of their app is now available in beta. Crucially, these changes allow users to stake any NFT that they wish, not just those within existing vaults. A full explanation of how NFT staking on this platform works, along with instructions for joining the liquidity pools, are posted in the recent whitepaper by NFTX.
KIRA is a new blockchain whose security process relies on multi-bonded proof of stake. The motto says, “A novel proof of stake consensus supporting any number of cryptocurrencies or Non-Fungible Tokens (NFTs).” KIRA offers to team’s coin in return for any staked NFT assets, which can then be staked to earn rewards.
Staking directly within an NFT collection
Holding NFTs in a collection that provides staking rewards means holders get their stake back when the share expires. It also naturally decreases the supply of each NFT, raising its floor price. Value is in a TCR token called REX.
Want to learn more about earning passive income with NFTs? Keep reading! Staking is the act of donating your tokens to a game – like Kindred or Mymee or to someone else. When you stake an NFT, you make it possible for the game designers to continue creating content for their games. Though unfortunately, there are only a few games that offer this option.
P2E game Axie Infinity introduced a passive income method integrated into the game; players can play collectibles for an 80% annual return rate. These collectibles are sharded governance tokens, which provide almost twice the staked $AXSs.
Splinterlands is another leading P2E game that includes staking features. Indeed, holders of the Splintershards (SPS) token will need to stake it to access taking rewards, participate in governance, or participate in special offers, promotions, and bonuses for SPS holders.
Players can earn passive income staking NFT’s through custom platforms like Splinterlands. Holding SPS or another cryptocurrency on either their Binance or game account will reward active participants.
Splinterlands SPS token poster
The case with Mutant Cats isn’t so straightforward. However, it highlights some of the potential issues that NFT projects have regarding staking. For example, Mutant Cats was a rare non-gaming NFTs that allowed users to stake their NFTs for rewards. Holder received rewards in the form of $FISH tokens- which is backed by the game’s success.
At least, that was the plan with Mutant Cats. While $FISH initially represented fractionalized ownership of the DAOs NFT collection, which included 11 Cool Cat NFTs, this is set to change. In short, Mutant Cats had some trouble with its original developers at Discordia. This led to an entirely new team taking over the project and overseeing the DAO.
After consulting with their lawyers, the team behind Mutant Cats announced several changes to how mutants work. One of these changes is that the team will be rethinking how to move past $FISH tokens entirely out of the possibility of violating securities laws.
Mutant Cats is an example of how NFT projects are still figuring out fully functional tokenomics and staking models. Nevertheless, earning passive income through NFTs has gained traction.