It’s well known you can earn money by staking cryptocurrencies. You can also earn money by staking nonfungible tokens. NFTs have become even more appealing due to this development because you can earn additional returns on your investment by staking them on NFT staking platforms.
As more and more people seek alternative ways to earn money, they look out for passive incomes similar to interest on savings accounts. Interest earned on savings accounts used to be relatively high for wealthy people. Today, bank savings rarely earn you interest; in some cases, your savings are taxed.
What is NFT staking?
Staking is another advantage of investing in NFTs and allows you to attach your nonfungible token to a platform in return for rewards. Thus, you can earn extra money while maintaining ownership of the NFT.
You can compare staking to yield farming in decentralized finance (DeFi). In Defi, crypto assets are lent to liquidity providers, earning interest and transaction costs through the actions of others. It is very similar to how you make interest through a bank, but with no intermediary.
What is the NFT staking process?
Since NFTs are tokenized assets, staking them works exactly like staking cryptocurrencies.
The concept of staking NFTs may still be relatively new, but NFT holders are very excited about it since a nonfungible token’s unique characteristics make its holders hesitant to sell.
To begin staking, first, find an appropriate platform. Carefully read the terms and conditions and once you are satisfied connect your wallet to the platform and sign the appropriate transactions.
Staking rewards vary depending on the platform. However, most platforms that offer staking rewards tend to pay out daily or weekly.
Furthermore, a number of staking platforms also support decentralized autonomous organizations (DAOs). By locking these assets into a DAO pool, also called an NFT staking pool, NFT holders may participate in the platform’s governance. Often, proposals are voted on, through this pool. The DAO may also allow you to make proposals yourself.
Since blockchain games account for a large proportion of the NFT market, you can find opportunities to stake NFTs in play-to-earn games like Axie Infinity (AXS), The Sandbox (SAND), and Splinterlands (SPS). As a player in a play-to-earn game, you can earn NFTs and crypto. NFTs can then be attained free of charge and staked.
The ever-growing number of platforms offering NFT staking mechanisms is a testament to the evolution of blockchain technology.
Furthermore, the combination of DeFi and NFTs has extraordinary potential. The idea of earning passive rewards while still maintaining ownership of NFTs is extremely appealing to many investors.
While NFT staking is still a relatively new concept, you can expect the number of platforms offering rewards for staking to increase substantially over the coming months and years.