NFT Renting Guide: Explore New Possibilities To Own NFTs
As NFTs are becoming more popular in various regions of the globe, the desire to own these unique digital assets is growing rapidly. The scope of owning an NFT is no longer confined only to buying and selling. The extended scope provides NFT enthusiasts an opportunity to rent Non-Fungible tokens for a particular period of time.
Renting NFTs can be an affordable option to get your hands on a particular NFT and explore its potential. Even though the NFT market is one of the highly competitive markets in the Web3 space, it cannot be that easy for an average collector to find a renowned NFT project for an affordable price. This is where NFT renting can be a savior for many collectors to have the feeling of what it is like to own their desired NFT. However, owning an NFT through renting process will require the consent of both parties and an NFT marketplace or any other NFT renting platform to bridge the gap between both parties.
How NFT Renting Actually Works
The NFT renting process isn’t complex at all. There is a handful of NFT renting platforms where willing NFT holders can list their NFTs for renting. In addition, they can also set the amount of stablecoin required as collateral, or they can also rent NFTs without collaterals.
Usually, the collateral required to rent an NFT can be the rent cost for a single day. For example, if the rent costs 1 USDT per day apart from the rent cost, the user has to pay an extra 1 USDT as collateral which will be returned once the NFT is successfully returned to the respective holder.
On the other hand, the NFT enthusiasts who want NFT on rent have to simply visit an NFT renting platform and search for desired NFT according to their criteria. In addition, the NFT lender can also fix the maximum period of time for which the party can hold onto the NFT.
Apart from setting the criteria, the NFT lender does not have to worry about rent collection, the safety of the NFT, or returning the NFT on time. Smart contracts can handle all these processes seamlessly.
Once the borrowing time period is set on the NFT marketplace, smart contracts do all the magic backend. Smart contracts, here, act as escrow and collect the collateral amount. In addition, pre-programmed smart contract codes also help you to collect rent on a daily basis for the entire set period. Moreover, it also ensures that the NFT is returned to the lender’s wallet address at the end of renting period.
Collateral NFT Renting Vs Collateral-less NFT Renting
There are two major renting processes widely supported by various NFT renting platforms across the globe.
Collateral NFT Renting
The collateral-based renting process requires the borrower to pledge the required collateral in order to own the NFT for the stipulated time. However, an NFT cannot be accepted as collateral to borrow another NFT. But it is possible for the borrower to pledge stablecoins and other crypto tokens as collateral. This is done as a safeguarding practice to avoid NFT thefts. The lender can also set the collateral price higher than the actual NFT price in order for things to end in a smooth way.
Collateral less NFT Renting
Collateral-less NFT renting can be a feasible option for the borrowers and lenders on the whole. This renting model does not have NFT theft risks involved like the other model.
Collateral-less NFT renting is totally different from collateral NFT renting. The borrower here does not have to pledge any stablecoins, and the lender does not have to actually lend the original NFT here. However, the borrower gets a wrapped NFT which will be exactly the same as the original NFT minted on the blockchain network. The wrapped NFTs are backed by the original NFT, which enables the borrower to exercise the NFTs utility. Once the period mentioned in the smart contract expires, the wrapped NFT will be burned automatically.
Since the borrower does not have hands on the actual original NFT, this NFT renting model significantly reduces the financial risks for the lender.
Gaming NFTs And Their Scope For Renting
Among the wide genres of Non-Fungible tokens, gaming assets have excellent scope for facilitating renting. Since Play Two Earn games provide a lucrative earning opportunity for gamers across the globe, renting features can come in handy for players to share this opportunity. Various in-game assets provide different degrees of earning scope, and sharing in-game assets can help other gamers make money easily.
In-game assets like avatars, weapons, vehicles, skins, player emotes, and other assets which upgrade the earning potential in the gaming platform for players can be put up for rent in the NFT marketplace or other NFT renting platforms. Currently, there is no limitation for gamers to rent their NFT, which also makes it a lucrative revenue-generating option for gamers.
Renting in the Gaming industry can greatly benefit both lenders and borrowers. It creates a passive income for gamers who wish to rent out their NFTs, and in addition, it also helps the borrowing players to have better-winning possibilities resulting in higher revenue from the game.
Apart from the collateral and non-collateral methods of lending NFTs, gaming NFTs can create a new lending mechanism. Gaming NFTs are borrowed to make better profits from the game, which creates a profit-sharing renting model. NFT lenders and borrowers can agree upon the profit-sharing ratio from the game’s revenue made by the borrower at the end of the lending period. This mechanism does not put the burden on the borrowing gamers to make quick profits on top of the renting cost within the stipulated time period.
Summing It Up
The NFT renting feature can be a blessing for NFT collectors, which enables them to get a glimpse of what it is like to own a particular NFT. In addition, it also serves as an additional revenue source for NFT lenders. While the scope of NFT renting can be exercised in any NFT category, gaming NFTs can adopt this trend very quickly and efficiently.