NFTs have been the most popular trend in the crypto space for the last two years. As the market expands, NFTs provide new use cases to the collectors apart from providing ownership of digital collectibles. Today, collectors can make money from NFTs through NFT staking without selling them.
NFT staking is like a sub-trend of NFTs that is gaining much traction from investors these days. In this article, let’s look at what is staking an NFT, how NFT staking works, and the most popular NFT staking platforms.
What is NFT Staking?
NFT staking is a new way of making money from NFTs by locking them in smart contracts. The holders or collectors can lock their NFTs in staking platforms and earn rewards and other privileges. This way, you can earn passive income while still having ownership of your NFTs.
Because of the inherent nature of NFTs, collectors buy, hold, and speculate on the value of NFTs. But, NFT staking allows you to monetize your assets without losing them by selling. It also increases the demand for NFTs by attracting more investors to participate in NFT staking platforms.
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How does NFT Staking Work?
Most of the blockchain networks today are working on Proof-of-Stake (PoS) consensus mechanism and depend on a global network of validators who verify transactions and keep the network secure. Validators stake cryptocurrency and verify the transactions in exchange for staking rewards. Similarly, you can stake NFTs in a platform and earn rewards for fees in exchange for dedicating your NFT to a blockchain network.
NFT staking works similarly to DeFi protocols, which allow the staking of cryptocurrencies in exchange for rewards. However, NFT staking is still in its early stages compared to the DeFi yield farming and crypto staking concepts. Different staking protocols work differently and have their own set of rules and rewards structures. Some protocols require NFT holders to vote on proposals, while others pay rewards for simply locking up the NFTs on their platforms.
To participate in NFT staking, you first need to hold the NFTs on a compatible crypto wallet. Then, you would have to send the NFTs to a staking contract and lock them for a certain period. Once the staking platform locks the NFTs, you start earning rewards. The reward system changes from one platform to another and depends on various factors.
Currently, you will find most of the NFT staking opportunities in Play-to-Earn (P2E) gaming and metaverse platforms such as Axie Infinity, Decentraland, The Sandbox, Polychain Monsters, Splinterlands, etc. Other staking platforms involve locking up the NFTs in DAO (decentralized autonomous organization) protocols. By locking NFTs in DAOs, you will have the opportunity to participate in the platform’s governance and vote on future proposals.
Staking NFTs is not so different from staking cryptocurrencies. However, it is important to note that not every NFT can be staked like cryptocurrencies. Different staking platforms have different terms and conditions. It is better to check which kind of NFTs can be staked on your preferred NFT staking platforms.
How much money can you make with NFT Staking?
When you lock NFTs on a staking platform, the amount of reward you can get will depend on various factors such as the annual percentage yield (APY), the staking duration, and the number of NFTs staked. It also depends on the platform you use and the type of NFT staked. However, most of the NFT staking platforms offer daily or weekly rewards.
When you start staking an NFT, the staking platform evaluates its worth based on its rarity and provides a suitable APY. The rarer your NFT, the higher your APY will be. Another important factor in determining the value of an NFT is the capacity to generate a stable income through royalties. The staking rewards will be in the platform’s native token. You can trade these tokens for other cryptocurrencies or fiat money on exchanges.
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NFT Staking Platforms
Many NFT staking platforms have sprung up recently as the demand for NFT staking is increasing among the crypto community. All you need to have to start NFT staking is a compatible crypto wallet. It is best you start using the most popular and reliable platforms before staking your assets. Let’s have a look at some of the most popular NFT staking platforms.
Splinterlands is a blockchain-based collectible card game built on the Hive blockchain network. It allows players to buy and sell digital cards with unique NFT identifiers. The game features more than 500 cards, which players can collect and use in battles. The native token on the Splinterlands game is SPS (splinter shards). It was set up as DAO on Binance Smart Chain. Users can stake their SPS tokens to earn rewards, participate in governance, and get special offers, bonuses, and promotions. They can also stake NFT cards in liquidity pools so that other games can use the NFT cards.
NFTX platform is used to create ERC20 tokens that are backed by NFT collectibles. Users can stake their NFTs on NFTX and mint ERC20 tokens that are fungible at a 1:1 ratio. These tokens are called vTokens which can be staked to get rewards and purchase NFTs from the vaults. Additionally, holders can pool their vTokens in automated market makers (AMMs) to provide liquidity for other users.
Band NFT is the world’s first global music NFT company run by musicians and fans. It is a music NFT exchange platform where users can buy music NFTs and stake them in royalty pools to get a share of the revenue generated by the music albums. If the music library becomes large, the royalty income stream increases for NFT investors.
Polychain Monsters is a cross-chain digital collectible and gaming ecosystem. This is a platform for animated cross-chain NFTs having different traits and varying levels of scarcity. These NFTs are also called Polymons and can be acquired from digital booster packs. The holders of these NFTs can stake them and earn weekly rewards in the form of PMON, the native cryptocurrency of Polychain Monsters.
Doge Capital is a collection of 5000 pixel-art NFTs minted on the Solana blockchain. Doge Capital NFT holders will get a membership to the Woof club and exclusive perks. The platform offers a staking program where users can stake these NFTs and earn daily rewards in DAWG tokens. It is the platform’s native utility token and is listed on multiple exchanges. By staking one NFT, users can get 5 DAWG token rewards per day.
How to create an NFT?
Any digital file can be minted as an NFT on the blockchain. Firstly, you need to create digital art or files like images, video clips, music files, etc. A crypto wallet is also necessary to pay the transaction fees for minting the digital file into an NFT and to collect the charges after selling the NFT. Choosing a crypto wallet and a reputable NFT marketplace with a strong user base is important before creating an NFT. After creating digital art, you can mint it as an NFT and sell it in the marketplace. We will cover a detailed procedure for creating NFTs in the coming articles.
For more information, read our guide on how to create an NFT.
NFT staking is a great way to make money from NFTs instead of simply holding the NFTs and waiting for their value to increase. It is one of the best use cases of NFTs with high returns. The NFT staking concept is still in the early stages, but it is gaining much attention these days. So, choose the best NFT staking platform and start staking an NFT today to earn rewards.
NFT staking is a way of earning rewards and exclusive benefits by staking NFTs in smart contracts.
Yes. You can unstake NFTs from the NFT staking platforms as soon as the staking period ends.