NFT staking is a new way to earn passive income in the crypto world. It lets NFT holders lock their assets in DeFi platforms to receive rewards. Similar to decentralized finance (DeFi) yield farming, NFT staking relies on a Proof of Stake (PoS) mechanism to reward participants. By locking up NFTs, users can receive rewards based on the annual percentage yield (APY) and the number of NFTs staked.
Here, NFT staking opens up a new way for collectors to profit from their NFT collections. It has become the new means to earn a passive income in the crypto world. HODLers who hold NFTs invest in DeFi systems. DeFi brings the blockchain's decentralized notion to the world of finance. They build platforms so that they can obtain rewards without having to sell or relinquish control of their collections.
By staking your nonfungible tokens (NFTs) on NFT staking platforms, you can make additional returns on your investment. NFTs have become even more attractive due to this development.
More and more people are looking for new ways to make money without having to work for it. Passive income used to be something wealthy people could get through the bank because the interest rates on savings accounts were quite high. Nowadays, you hardly receive any interest on your money in the bank; in some cases, you even have to pay for your savings! Due to the relatively high rewards for staking cryptocurrencies and NFTs, a new-age alternative has been found.
How Does NFT Staking Work?
For NFTs, not every nonfungible token can be staked, just as this is not possible for every token. Because NFTs are tokenized assets, you can deploy them on NFT staking platforms where you can keep them safe. This is possible via a smart contract on the appropriate blockchain protocol. Even though staking NFTs is a relatively new concept, many NFT holders are very excited about this development. That is because a nonfungible token is unique, making holders reluctant to sell.
This is the big difference with cryptocurrencies, where you can easily buy and sell crypto. To stake NFTs, you need a crypto wallet, which must be suitable for the NFT in question. First, you need to check if your favorite wallet also fits the blockchain on which the NFT is located. Then you need to connect the wallet to the staking platform so you can send your NFTs to the platform. This operation can be compared to staking your coins. Both can be performed by going to the staking section of the platform.
Rewards of NFT Staking
The type of staking rewards that NFT holders can receive for deploying their NFTs depends on the platform and the type of NFT. Most NFT staking platforms offer periodic rewards, which are often paid out daily or weekly. Often, these rewards are paid out in the platform's utility token, but there are exceptions.
Regardless of the token used for staking rewards, you can trade the staking reward tokens and possibly convert them into other cryptocurrencies or fiat money. In addition, there are also staking platforms that have decentralized autonomous organizations (DAOs). Here, NFT holders can lock their assets into a DAO pool, also known as a NFT staking pool, which allows them to participate in governance tasks on the platform. This often includes voting rights when proposals are made. It is also possible to make the proposals yourself, but this varies by DAO.
How to Earn Income from NFTs
If you have NFTs in your crypto wallet, you can use them to earn passive income. NFT staking is the newest way to build passive income with blockchain technology. With any source of such income, you must make an investment upfront. Although this can be in money or in time, a passive income through NFTs is primarily achieved through an investment with money.
NFT Staking Platforms
Due to the huge rise of play-to-earn NFTs, there are many examples in this area.
Binance NFT PowerStation: For the Binance Fan Tokens, there is a staking platform where holders of NFTs can earn by supporting their favorite sports teams. By deploying their NFTs, they can earn additional Binance Fan Tokens. Binance is one of the largest cryptocurrency exchanges, with tens of millions of users worldwide. In addition, Binance provides the most services, including NFT staking, to its users. Binance Fan Tokens are utility tokens, which are associated with a particular sports team. With this token, token holders can enjoy various privileges. For example, as a token holder, you can benefit from priority ticket sales or have a say in important decisions within the sports club. Binance Fan Tokens are in demand primarily among those in sports clubs, but can also be used by artists or other celebrities, who have a large following.
MOBOX (MBOX): Another example of the NFT staking platform is the platform of MOBOX, a game built on the blockchain. MOBOX has a metaverse called the MOMOverse, where you can find different NFTs. You can trade these NFTs on MOBOX's marketplace, but you can also stake them and build a passive income. Each MOMO has different qualities, with its hashing power randomly generated. When you stake MOMO, you can receive the governance token from MOBOX as a staking reward. The number of the reward is calculated based on the amount of MOMOs you stake. Because each MOMO varies in rarity, the hashing power also varies, which affects the staking rewards. MOBOX is, of course, one of many examples. Well-known NFT games such as Splinterlands and Axie Infinity also offer this service to NFT holders!
Zookeeper (ZOO): Zookeeper is a gamified yield farming DApp. It provides NFT staking in liquidity pools that feature different mascots. All liquidity pools in Zookeeper allow dual farming, meaning that you can earn both the utility token ZOO and the WanSwap Liquidity Provider (WASP) token as rewards. To increase APY rewards, you can choose to lock your tokens for a certain period, up to 180 days. You can also stake NFTs called ZooBoosters to maximize your rewards and reduce the locking period for your WSLP. ZooBoosters are NFT cards that can be obtained in gold chests purchased in the DApp or by staking ZOO tokens.
Conclusion
NFT staking allows participants to make an extra income from their idle NFT collections. At the same time, NFT staking is creating new use cases for NFTs that were never explored before. It might be too early to tell, but we will probably see new NFT staking opportunities being created. Not only for NFT collectors but also within the Play-to-Earn gaming industry and other areas powered by blockchain technology.
Thus, once the platform is fully completed, it shows you a way to enhance your future with rewards at regular intervals. You can start your stake now for a better future.
Source: Cointelegraph | Binance Academy | Finextra