What Does Staking NFT Mean: How To Earn Passive Income

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Most of us consider non-fungible tokens (NFTs) as digital images of art pieces and collectibles. We think it could grow in value over time. Staking NFT will help us earn passive income. So, let’s get to know more about it!

An example of NFT is CryptoPunks. It has 10,000 unique characters. Each character can be owned by one person on the Ethereum blockchain.

NFTs come in many sizes, shapes, and colors. Certainly, we see them on many platforms in diverse forms. Online game assets are the most popular type.

Before, NFTs were sold or traded in exchange for a rare item. Today, there is a better way to use the NFT owner’s items. It’s called “staking”. 

This article is all about staking. We will learn how to earn passive income by staking NFT.

NFT Staking Explained in Simple Terms 

Staking NFT means confining NFT to a protocol or platform. This is in return for staking prizes and extra gains. Staking NFT gives holders income by keeping their collections.

NFT’s uniqueness makes them ideal for wait-and-HODL strategies. This strategy takes time before we can see a good result. 

Also, the process of producing, buying, and selling NFTs can be labor-intensive. At times, it requires great transaction fees like on Ethereum. It is also uncertain if the value of NFT will rise over time.

Compared to DeFi, collectors receive rewards without selling or losing ownership of their collection.

How NFT Staking Works 

Staking NFT means letting us earn more with our assets while retaining ownership of it. It works by putting an NFT on hold on either its built-in blockchain. This blockchain supports staking to earn a yield.

Additionally, NFTs are wrapped in a smart contract. It’s called ERC-721. There are tools within the contract. It helps the token link with other tokens and the blockchain they’re in. Staking your NFT makes the contract work and handles your earnings.

ERC-1155 is another type of smart contract. This is more efficient than ERC-721. However, this disregards the rare item’s special element. ERC-1155 is the best for wholesaling.

There are ways we can stake an NFT. The most common way is to earn yields. An example given is CryptoBlades. It is a P2E game and picks up a grade-A thing.

If we choose to tether it, the blockchain CryptoBlades will keep that item. We will be receiving SKILL tokens as a payment. SKILL token is the game’s native currency.

We aim to keep some of the rarest items out of the passage. This is for the developers to create more of the same. This results in more players and earning more income. Some platforms will let us use the NFT in their games and staking them. 

Modern cryptocurrencies are moving towards the Proof of Stake system. It is where users stake a part of their coins. This is to validate trades on a blockchain and get rewards

Validators are randomly selected every time a new transaction is made. It is better to make more staking. This will raise the chance of getting the right to validate transactions.

How To Earn Passive Income with Staking NFT

Getting involved with NFT staking gives us profit. This profit requires very little effort involved. The rewards we get for staking could be fungible tokens such as cryptocurrencies. This could be traded for something else.

The reward from staking could also be more NFTs. We can choose to trade or stake these NFTs. The new NFTs earned often have exclusive ownership that gives extra benefits.

NFT staking is referred to as passive income. Once we have registered ownership, we can just watch its value grow. 

These are different platforms that offer different NFT collections:

  1. NFTX – 

Holders of NFT collections deposit their NFTs into a vault. In return, NFTX provides an ERC20 token called “vToken”. These can be staked to give rewards. vToken could be used to purchase other vault NFTs. It could also be sold on decentralized exchanges or put into liquidity pools.

  1. KIRA 

It is a blockchain that secures its network. This happens through a process called multi-bonded-proof-of-stake. KIRA gives the $KEX token in return for any NFT assets staked. This can then be staked to earn rewards.

  1. Axie Infinity – 

Players can stake the governance token of the game. The token is called Axie Infinity Shards ($AXS). Today, it brings an 80% annual percentage rate (APR). This means stakers earn twice the amount of $AXS they stake in a year.

  1. Splinterlands – 

(SPS) token holders need to stake their tokens. This is to access taking rewards. They could also participate in governance or participate in special offers. Promotions and bonuses are also available for SPS holders.

  1. Mutant Cats – 

It is one of the rare non-gaming NFTs. It allows users to stake their NFTs for rewards. Holders receive a $FISH token when they stake their Mutant Cat NFTs. 

However, there are best platforms for NFT staking that we don’t want to miss. We will be discussing that next.

Best Platforms for Staking NFT 

Many platforms appeared recently which give opportunities to stake NFTs. We just first need to stake our NFTs in a compatible wallet. Here are some of the best platforms for NFT staking.

NFTX

NFTX is a tenet for making ERC20 tokens. These are backed up by the NFT souvenirs. Buyers stake their NFTs in the NFTX crypt and stamp an ERC20 token. 

The token is fungible at a 1:1 ratio and is compostable. These tokens, called vTokens, can be staked for yield rewards. It can also be used to purchase specific NFTs from a vault.

Splinterlands

Splinterlands is a blockchain-based card game collectible. Players can build up a collection of cards. These lists various abilities and stats, and use them in matches.

The game’s native token is called SPS. It is set up like DAO on the Binance Smart Chain (BSC). Users can stake their SPS tokens on players participating in ranked battles.

Users can also stake it on liquidity pools, and DAO pools. This will allow them access to governance voting.

BAND NFTs

Music NFTs act as a new era for the music industry. Creators have complete control over distribution. BAND Royalty is the frontline of this revolution.

This is NFT trading where buyers purchase NFTs music. They can support them in pools of royalty. This will help them earn a part of the earnings their songs gain.

The royalty income stream will increase if the music library platform is large.

Polychain Monsters

Another blockchain tenet is Polychain Monsters. It is for lively collectible NFTs named Polymon. This Polymon is gained from virtual (booster) packs. These have different traits and changing levels of rarity. 

Additionally, some mixtures are very rare and attractive. Polymon holders can stake their Polymon NFTs. There are rewards weekly in their native cryptocurrency, PMON.

Doge Capital

Doge Capital is a group of 5,000-pixel art NFTs. It was minted on the Solana blockchain. They can also be bought from any Solana marketplace.

Doge Capital has a staking plan. It offers DAWG tokens to NFT holders. We could get this as everyday gains.  Doge Capital’s native utility token is DAWG. It is listed on a few transactions. This includes Dexlab and Raydium.

Is Staking NFT a Good Investment? 

Liquidity is a huge issue for NFTs. This is partly due to the underdeveloped ecosystem. Also, NFTs are usually purchased for HODLing. They use this as their long-term investments.

However, the popularity of NFTs has stirred the interest of investors. This led to first-time investors in the crypto world exploring. They are drawn to the possibility of earning rewards on NFT platforms.

Cryptocurrency staking is more famous than NFT staking. But NFT staking is more likely to advance soon. Just like what happened to Eth2. It successfully upgrades to a PoS mechanism. Staking is replacing mining. 

Staking NFT today is a trend that is established to last. This allows us to play crypto games. As we play, we earn NFTs. These NFTs can be staked and get rewards.

The rewards are from locking up our digital assets on a certain blockchain. Certainly, NFT’s growth is unquestionable.

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