Non-fungible tokens (NFTs) are products of blockchain technology. They are investment assets that have unique identification codes, making them “non-fungible” or unable to be exchanged with something similar. They are different from cryptocurrencies, which are “fungible” or can be exchanged with other cryptocurrencies.
NFTs are assets in the form of cryptographically unique tokens on the blockchain, such as ERC-721 tokens that exist on the Ethereum blockchain. They are stored in a wallet in a similar way as how you would store Ether or ERC-20 tokens.
There is quite a list of things you can use an NFT for, including gaming, buying and selling, collecting, tracking land ownership digitally, and speculating or waiting for its value to go up.
NFT staking is one of the other ways to put your assets into good use. Staking will earn you passive income in the blockchain sphere. Think CryptoKitties on steroids! Staking NFTs is a process of proving that you actually own a specific NFT and are eligible to receive rewards for its creation or use in a given application (e.g., buying and selling your cats on CryptoKitties).
How does NFT staking work?
When you stake a cryptocurrency, you let the staking platform hold your assets for their liquidity. It may also be used to help the platform perform some of its activities or confirm transactions on the blockchain.
The blockchain confirms transactions before they are added as verified data on the blockchain. Your staked coins allow the platform to complete such transactions.
In return, you will be rewarded with more coins. The staking can be on a fixed time duration or on a flexible basis.
Staking an NFT is somewhat similar. When you stake an NFT, you “lend” your assets to the platform that provides staking service. In return, you can earn tokens generated by that blockchain.
You retain the right and ownership of the NFT.
Remember that not all NFTs can be staked. Most NFTs that can be staked are those from play-to-earn games, such as Decentraland.
How much can you make staking NFTs?
Like staking cryptocurrencies, NFT staking can also be generous in terms of being an income stream. It’s profit with little effort, which makes it a good starting point for beginners in the NFT space.
Depending on where you stake, you will be rewarded by the governance token of that platform or an NFT. NFTs are also categorized based on their rarity. If you have a rare NFT on your hands, you can bet it will return bigger rewards. In most cases, the rarity of NFTs are common, rare, epic, and legendary.
Between staking an NFT and saving your money from the bank, the former provides much higher return rates than the latter. Some staking platforms provide up to 20% annual percentage rate (APR) while others offer up to 200% APR.
Where can I stake NFTs?
Staking of NFTs are usually offered in play-to-earn games.
The play-to-earn business model allows users or gamers to play the NFT games and be rewarded with tokens or NFTs for playing. NFT rewards come in the form of in-game assets such as skins, weapons, avatars, and lands.
Onessus is another popular staking platform. Its vision is to accept the staking of any and all types of in-game assets from different kinds of games.
You’ll want to keep your eyes peeled for new and exciting projects in order to capitalize on an opportunity as soon as it presents itself. For example, if you stake your ownership of a Cryptokitty, which can never be duplicated, then you can trade it or sell it later for a profit.
We’re only at the tip of the iceberg with respect to what blockchain technology and NFTs are capable of doing, so don’t be afraid to experiment with different platforms and dApps.
Start your NFT staking today
NFT staking may be in its infancy, but it has been a proven avenue to grow your income passively in the blockchain space.
In using the service, you also provide the much-needed liquidity that platforms require to operate and grow. You can earn rewards in the form of governance tokens or NFTs also.
Remember to check the value and rarity of the NFT before buying it; a rarer item will earn you a bigger payout.