Aside from crypto, now you can stake your idle NFTs and earn rewards. Here's how NFT staking works and the various platforms where you can try it.
When we hear the term Non-Fungible Tokens (NFTs), most people would immediately think of digital representations of artworks and collectibles whose value has the potential to grow over time. In the past few years, the popularity of NFTs has soared significantly thanks to their unique nature and rarity. As a result, many people want to get their hands on valuable NFTs and be a part of the vast community.
As the market expands, many developers and artists are starting to search for new ways to make use of NFTs aside from providing ownership of digital collectibles. One of the most recent innovations is using NFTs as utility tokens in staking platforms. This allows NFT holders to lock their assets in a platform to earn rewards without having to sell their collections. Although the concept is still in its infancy compared to other DeFi yield farming programs, NFT staking is still worth considering, especially if you're an NFT collector yourself.
What is NFT Staking?
As the name suggests, NFT staking allows users to stake their NFTs instead of crypto coins. It is a new alternative way to make money from NFTs without having to sell them to another collector. Basically, the concept refers to the locking up of NFTs on a certain platform or protocol in order to earn staking rewards and other privileges. This allows the holders to earn passive income while still having full ownership of their NFT assets.
With that being said, NFT staking is actually very similar to other DeFi yield farming concepts. By locking up their assets, users can earn rewards based on the annual interest rate and the amount of assets they staked. NFT staking can certainly benefit individual investors as the overall supply tends to be lower. But not only that, the concept can also improve the value of NFT as a whole and increase the demand since it goes beyond the idea of collecting digital art.
How NFT Staking Works
Many blockchains today are using the Proof-of-Stake (PoS) consensus mechanism to operate. They need validators to verify transactions and keep the network secure. In order to be a validator, one must stake a certain amount of cryptocurrency for a chance to be randomly picked to verify transactions. Validators get paid crypto rewards for their work. Similarly, you can also stake your NFTs in a platform or protocol to earn rewards in exchange for dedicating your assets to the network.
See Also: Is Non-Fungible Token (NFT) Worth It?
As mentioned before, NFT staking works similarly to earlier DeFi yield farming concepts. However, NFT staking is still considered very young compared to others and each protocol has a different set of rules. For instance, some protocols require users to vote on proposals, while some others pay users for simply locking their assets on the platform.
In order to participate in NFT staking, all you need is a crypto wallet that holds the NFT. Then, you would have to send the NFTs to the staking contract and lock them for a specific time period. Once your assets are locked, you start earning rewards. Just keep in mind that not every NFT can be staked like cryptocurrencies. Therefore, make sure to check on your preferred projects before staking.
NFT Staking Platforms
Currently, most NFT staking opportunities are available on Play-to-Earn (P2E) games and metaverse platforms such as MOBOX, Axie Infinity, Polychain Monsters, the Sandbox, and more. Apart from that, you can also find NFT staking on DAO protocols and crypto exchanges like Binance Fan Token Platform and DOGE Capital.
Binance Fan Token Platform
Binance is one of the largest exchanges in the world and the first crypto exchange to offer NFT staking. Binance Fan Token is a platform where NFT holders can earn rewards by supporting their favorite sports team. By staking NFTs, Binance users earn extra Binance Fan Token rewards.
The tokens are basically utility tokens that are issued by a specific sports club. These tokens allow users to enjoy various club privileges. For example, you can get special discounts on tickets, get limited-edition merchandise, and have the right to vote on important decisions within the club.
See Also: What are Fan Tokens on Binance?
In addition, Binance offers the NFT PowerStation, which is the gamification of the Fan Token Platform. By locking NFTs on the NFT PowerStation of a particular team, fans can boost their fandom and claim additional fan tokens. The longer the NFTs are locked in the PowerStation, the higher the token rewards.
Another example of an NFT staking platform is MOBOX, which is a P2E game that combines DeFi yield farming and NFTs. Built on the BNB Smart Chain, MOBOX has a metaverse called MOMOverse where you can find various NFTs called MOMOs. You can mint, earn, buy MOMOs from the game's marketplace, or you can stake them for passive income. Each MOMO has a unique quality and the hashing power is randomly generated.
Staking MOMO will earn you rewards in MOBOX's native currency, MBOX. The amount of reward that you get daily is based on the number of MOMOs you stake, so the more you collect, the higher the rewards.
Another example of games that support NFT staking is Splinterlands. It is a blockchain-based collectible card game that was built on the Hive network. The game involves buying and selling digital cards with unique NFT identifiers. There are over 500 cards in the game that players can collect and use in battles.
In Splinterlands, players can stake their NFT cards in liquidity pools and let other players use the cards to earn interest. Apart from that, players can also stake the game's native token, Splinter Shards (SPS) to earn rewards, get voting rights, as well as enjoy special bonuses within the game.
See Also: 5 Best Metaverse Games to Play in 2022
The Bottom Line
NFT staking is a brilliant way to make extra income from idle NFT collections. Instead of simply collecting digital arts, NFT holders can actually use them to generate profit without having to sell them off. While the NFT staking concept is still in its early stages, it's gaining so much attention already. It might be too early to say, but we will probably see wider uses of NFTs across the DeFi space in the next few years.
If you are considering staking your NFTs, it's important to understand what you want to achieve. You need to know where the best opportunities are for your assets. This is why market research is highly important in NFT staking. Remember that there are various NFTs that you can stake and each has its own characteristics. To clear up your confusion, you may first learn how to choose the best NFT.