What Is NFT Staking And How To Earn From NFTs?

NFT Staking seems to be taking the digital world by storm since it enables holders to earn some more income without having to offload their NFTs. Blockchain technology continues to attract many people, enabling them to explore new tricks to earn revenue without necessarily working for it.

Just like in crypto, where investors get returns from trading their holdings, non-fungible token (NFTs) holders can also earn some revenues from staking their NFTs. NFTs have become even more attractive due to this development. Notably, passive income is not a new model. Previously, many wealthy people used to get these services from traditional finance systems, which offered high-interest rates on saving accounts.

Unfortunately, nowadays, many traditional finance systems no longer offer such services, with some banks even forcing their clients to pay ledger fees for their savings in some cases. In that context, NFTs appear to be a new-age alternative offering relatively high returns on staking.

NFT staking Overview

NFT staking simply means attaching your unique token to work on the blockchain. In exchange for this action, NFT holders remain the owner of NFTs and receive extra incentives for staking the nonfungible tokens.

More often, NFTs depict digital images, such as the Bored Ape Yacht Club Collection. However, NFTs can also represent other objects, including digital artwork and in-game items.

Staking in NFTs is comparable with decentralized finance (DeFi) yield farming, where cryptocurrencies are lent or deployed to liquidity providers to earn rewards from interests and transaction fees. These earnings are similar to those traditional financial institutions offer. But, in this case, there is no intermediary. NFT staking operates in the decentralized finance world while banking is centralized.

Since non-fungible tokens (NFTs) and digital assets have similar characteristics, not every NFT can be staked. Unlike in cryptos, asset holders can deploy their NFTs on platforms and earn some rewards. The action is made possible via a smart contract on the appropriate blockchain protocol.

Although NFTs staking is a relatively new concept, many NFT holders have warmly embraced this development. Since non-fungible tokens are unique, they make holders reluctant to sell. That is the main difference between NFTs and cryptocurrencies when it comes to staking.

First, NFT staking requires an investor to have a crypto wallet suitable for the NFT in question. NFT holders must also check if their favorite wallet supports the blockchain hosting an NFT.

Lastly, an NFT holder must connect the wallet to the staking platform to start sending NFTs. That process is comparable to staking digital coins, where one must go to the staking section on the staking platform.

How To Earn Passive Income From Staking NFTs

The amount of staking reward that NFT holders can receive depends on the staking platform and the type of NFT. Many staking platforms offer periodic rewards programs such as daily or weekly. In most cases, rewards are paid out in the platform’s utility tokens, although they are still exceptions. NFT holders can use their earnings to either stake back or convert into other digital assets or fiat.

Moreover, NFT holders can attach their NFTs to staking platforms supporting decentralized autonomous organizations (DAOs). In this case, NFT holders can lock their assets into a DAO pool, popularly known as the NFT staking pool.

Often, DAO allows NFT holders to participate in governance tasks, including voting on proposals on the platform. DAOs also allow NFT holders to propose themselves, although this varies on different platforms.

Since many NFT projects in the NFT market belong to various blockchain gaming firms, there are emerging staking opportunities in play-to-earn (P2E) games such as Axie Infinity (AXS), The Sandbox (SAND), and Splinterlands (SPS). The P2E gaming will not offer NFTs holders crypto but also NFTs, making it possible to earn NFTs for free.

Takeaways

Blockchain technology is now the newest way to build passive income. If you have NFTs in your crypto wallet, you can use them to earn passive income through NFT staking. Although investments are either in money or time, holders can only achieve passive income through investment in fiat.