When you explore deeper into the NFT space, many distinct token offerings can be found. As unique and diverse as these token offerings might be, common among most of these unique offerings is their hefty prices.
Buying and collecting NFTs is undoubtedly not cheap. Even the cheapest NFTs from well-known projects like Bored Apes and Cryptopunks are not offered for sale at a cost that is within the average person’s means. NFT rental enters the scene in this situation. It means precisely what you might assume — that tokens are rented out to give customers a brief taste of what it would be like to possess an NFT and use its utilities.
What is NFT Rental?
A person who owns a certain NFT can rent it out to someone else who needs it for a brief period of time. NFT rental marketplaces use Defi-like blockchain technologies to facilitate secure transactions and guarantee that the NFT is returned to the owner when the rental time has ended.
Most of us have now figured out how NFTs work, and we can all agree that they enable some fantastic business ideas. But the rate at which innovation is advancing in this space is astounding, and it’s becoming challenging to keep up.
How to rent NFTs?
There are two broad ways through which NFTs can be rented out — collateral-less renting and collateralized renting.
Collateralized renting
On a marketplace with built-in lending and borrowing functionalities, owners can list their NFTs. Renters interested in the NFT would then start the borrowing procedure, which would involve placing the NFT inside a smart contract. Next, the lender and renter would agree on the smart contract’s conditions. The rental procedure starts after the terms have been decided and agreed upon.
The renter must deposit collateral worth more than the NFT to safeguard the lender’s interests. Additionally, there is a rental fee that the renter must pay. The NFT will be returned to the original owner after the contract expires, and the borrower will receive their collateral back.
Collateral-less renting
Renting without collateral follows a similar procedure to renting with collateral. The sole distinction is that the renter never receives the original NFT, unlike collateral renting. Instead, a wrapped NFT is created for the renter that has the same features as the original asset and is backed up by the real asset. The wrapped NFT is burned once the contract ends. In this situation, neither the renter nor the owner is required to put up any collateral. The financial risk is reduced for both parties as a result.
Why Would Someone Rent an NFT?
Most NFTs include some sort of utility. Almost always, this utility has a market price. As a result, it’s possible that the NFT’s owner won’t always want or be able to use this utility. Instead, they may generate passive revenue from their assets by renting out the NFT.
NFT renting is an inexpensive way to take advantage of some utilities provided by the NFT without spending hundreds or thousands of dollars to buy them, such as access to unique members-only content. For instance, have a look at Stoner Cats. Holders of this NFT project, created by American actress Mila Kunis, get access to the corresponding animated television program. The renter, who may have seen all the released content, could profit from their holdings by renting out the Stoner Cat NFT. It is similar to renting a DVD or movie from an online library for the borrower in that you watch the content and then return it.
Where Can I Rent NFTs?
The rental market for NFTs is still relatively small. There aren’t many NFT rental marketplaces yet because of this. The three that are most well-liked are reNFT, Vera, and Trava NFT. Of these, reNFT and Vera have been gathering a lot of momentum lately, with venture capitalist company Animoca Brands raising seed money for the two platforms at US$1.5 million and US$3 million, respectively. The demand for NFT rentals will rise as they gain popularity, and additional venues for renting NFTs will start to appear.
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