Introduction
Non-fungible tokens (NFTs) are unique crypto assets that signify the ownership of a physical or non-physical token and are hence stores of value. The rarer the asset, the precious the NFT. However, what’s more, important is that they are blockchain-built assets that can also be staked just like other Cryptocurrencies to make significant gains
NFT has been trending this year, quite literally. Collins Dictionary named it the ‘word of the year’. However, NFT has increased popularity not just because it is the first of its kind to offer verifiable digital asset ownership, but also because it can generate good returns.
What is NFT Staking?
NFT staking raises to the securing NFTs on a platform or protocol to get staking rewards and other treats. This lets NFT users earn a passive income while still upholding ownership of their NFTs.
While NFT staking is still in its early stages related to other DeFi yield farming ideas, the effort is in a similar way. By holding up NFTs on a platform, you can obtain rewards depending on the annual percentage yield (APY), the staking period, and the number of NFTs staked.
In return, miners earn rewards in the form of the native Cryptocurrency for allocating resources. This model of promising crypto assets is called the ‘Proof-of-Stake’ model, and the method is called ‘staking’.
Similarly, you can initiate NFTs to back a project while you earn passive income in terms of rewards or fees for offering this asset to a blockchain. Presently, most of the NFT staking opportunities are offering play-to-earn gaming platforms such as Decentraland, Sandbox, Axie Infinity, among others. All you have to create is a Cryptocurrency wallet with NFTs.
Over 50 percent of the NFT market is acceptable to in-game NFTs, which players can purchase using Cryptocurrencies. Axie Infinity, for instance, has generated a sales volume of over $2 billion since its launch in 2018.
However, it is vital to note that all NFTs cannot be staked. So you need to check the facts before buying the NFT.
How NFT Staking helps in ROI?
When you stake an NFT, the staking platform defines its value based on rarity and comes with an annual percentage yield (APY). The rarer you’re NFT, the higher the APY you get. The value of an NFT also relies on its volume to generate a stable income stream such as royalties.
Where can you Stake NFTs?
The 5 most popular staking platforms are:
- Onessus
The When Staking platform enables all types of in-game NFTs from the Onessus blockchain games to be staked through its native currency, VOID. Depending on the staking period, it provides up to 80 percent APY on NFT staking.
- Only1
This platform has a unique staking system made on social engagement. It lets multiple users stake its native currency $LIKE on NFT creators of their preference. If the creator has an excessive social media engagement with the stakes, the APY offered is higher.
- NFTX
NFTX lets users of certain NFT collections store their NFTs into a vault. In return, NFTX presents an ERC20 token called a vToken. To simplify, this occurs as a 1:1 swap. This means that staking 1 NFT in the vault acquires you 1 representative vToken. Then, vTokens can be staked to make rewards, used to buy another vault NFTs, place into liquidity pools, or traded on decentralized exchanges.
- KIRA
KIRA is a blockchain that protects its system through a method called multi-bonded proof-of-stake. In contrast to regular PoS networks, KIRA enables users to stake any number of Cryptocurrencies or NFT assets. KIRA provides the $KEX token in return for any NFT assets staked, which can then be staked to earn rewards.
- Staking Directly within an NFT Collection
Without a doubt, the simplest kind of NFT staking comes within NFT collections that offer this feature directly. Staking NFTs within a collection yields rewards for users who’s NFTs are stored in their wallets, it naturally decreases the source of that NFT. In theory, this increases the floor price of the NFT collection (as long as demand doesn’t also decrease).
There are also some other platforms such as MOBOX and Zookeeper where you can purchase digital assets and stake them to earn a great return.
Why NFT Staking is Important?
One of the main issues in NFTs is the lacking of liquidity. That is to say, due to the non-fungible nature of NFTs, trading them isn’t always easy. Certainly, much of the value of an NFT is mostly subjective it’s valued, whatever a particular person is wishing to pay for it. On the other hand, NFT tokens like Cryptocurrencies are much more simply traded as they have a market-defined worth related to both fiat currencies and other Cryptocurrencies.
The solution that NFT staking offer is allows users to earn from their NFTs without directly finding a buyer. In this way, staking issues the liquidity problem with NFTs.
Conclusion
NFTs are lasting to interrupt the crypto markets as organizations block funds into their development. Although in its promising stage, NFT staking is holding the fancy of investors who may get attracted by high APYs. It is always wise to read up on the fundamentals of Cryptocurrencies and blockchains before investing in NFTs or staking them.