Why the Market for NFT Rentals Will Explode Over the Next Years
“Giving a little more thought to the idea of buying and selling digital cash,
I thought of a way to present it. We’re buying and selling cryptographic trading cards.”
I. Introduction
This sentence was written by bitcoin pioneer Hal Finney in 1993 making it probably the earliest mention of “NFTs” ever.
Over the last thousands of years, humans have developed various types of ownership rights, property rights, and licensing methods that mostly worked well for physical items. With the rise of the internet, there has been a tremendous increase in digital assets for which neither the ordinary rules nor current technical attempts were able to securely verify authenticity, scarcity, and ownership, therefore reducing their marketability. With the invention of blockchain technology all of these problems can be solved leading to endless emerging opportunities in the digital world.
II. What NFTs are and why it makes sense to rent them
First and foremost, NFTs are nothing more than digital assets that are stored on the blockchain. Due to the innumerable areas of application and possibilities of NFTs, the following types of NFTs have emerged at the present time.
1) JPEGS
The most known and simplest type of NFTs are JPEGS. Most people have probably heard about it because of the high-selling records that have been achieved by artists like Beeple or NFT-projects such as CryptoPunks, Bored Ape Yacht Club and more. There are various situations where it makes sense to rent a JPEG. If, for example, a museum wants to display a certain artwork for an art exhibition, they can easily search for their preferred piece of art and choose to rent it for the duration of the art exhibition without having to worry about logistics, transport damages, etc. With Twitter’s upcoming integration of NFTs, there will be a big interest in displaying JPEGs as profile pictures similar to wearing nice clothes or driving a stylish car in real life. Sometimes JPEGs can even grant entry to certain events. The Bored Ape Yacht Club event for instance was only possible to attend for holders of the BAYC NFT, and many of the holders could not attend or were oversees.
So, it is possible to rent an NFT from someone who can’t attend a certain NFT holder-only event without having to pay immense price tags to fully own the NFT.
2) Gaming
The more utility an NFT has, the more likely it is that someone would be willing to rent it. That is why NFTs in the gaming sector will probably be one of the biggest markets in the digital world. Gaming NFTs can either be in-game assets that represent in-game content such as in game digital fashion wearables, weapons, cars, or even virtual real estate in games like The Sandbox. Another example of a popular NFT game is Axie Infinity where players can let their in-game assets, called Axies, fight against each other and earn Smooth Love Portion tokens through that. (Play-to-earn)
Playing the game requires you to have at least 3 Axies, so there is a high-cost barrier for new people to even try out the game. To overcome this hurdle the Axie community has created the so-called Axie scholarship program where players can lend out their Axies to other players so they can enjoy the game as well without having to buy Axies. This trend is emerging among all games in the space.
Currently, this is a full time job to manage being done in a way that the lender creates a new account and provides the (renting) player with their log-in data, then the renter receives in-game tokens called Smooth Love Potions for playing the game that will be manually shared between both parties afterwards. That is where reNFT comes into play heavily.
With reNFT Axie owners would be able to rent out their Axies to other players and automatically receive their share of the revenue in a fully automated and trustless manner, making it far easier and more secure for others to rent out their precious Axies. This can be applied to any NFT enabled games on the market.
3) Metaverse
With the renaming of Facebook to Meta, even the largest digital companies are taking the step into a new digital age in which they will support NFTs. Users will be able to rent virtual ad spaces and in-game billboards making NFT rentals an important economic factor in the new age of digital marketing. We believe over time users will spend more and more time in virtual worlds, experiences and games.
4) Music
It’s even possible to turn your music into an NFT!
Imagine selling your music directly to your fans, autonomously deciding on the number of copies you want to distribute, the price, and even the type of distribution. You can even add certain incentives for buyers of your music such as reduced future concert prices, or merchandise prices, or even preemption rights for tickets for holders of your NFT music album. Artists will be able to reward their most loyal fans better than ever before. Through that, it is possible to generate money from a music album you’ve bought years ago if you would rent it out to people that want to attend a concert and get upgraded seats (for example album NFT-holder reserved).
It is no coincidence that members of the music industry, namely Kings of Leon and Mike Shinoda of Linkin Park have already started experimenting with music NFTs.
5) Domains
We are seeing an increasing number of domains become NFTs.
Premium domain names can be extremely expensive depending on the uniqueness or length of the title, so it makes sense to just rent a domain name for a certain period in order to obtain the best domain name for a good representation of companies or events. Unlike common domain providers, there are no renewal fees for NFT domains since it is minted as an NFT on the Ethereum blockchain, granting the user full ownership and control of their content.
With the possibility of lending a domain, the infamous and multi-billion dollar industry of domain name flipping will heavily decrease since owners don’t have to sell their domain name if they can generate rental income through it.
6) Tickets / Events
Another type of NFTs are tickets for events such as music festivals or concerts. Since NFTs can’t be copied as easily as ordinary concert tickets, music fans don’t have to worry about getting scammed and receiving fake tickets anymore since authenticity can always be proven with the NFT-underlying blockchain technology. And it doesn’t end here because collectors are able to display their beloved tickets online and trade them with other festival fans.
Imagine being a holder of a ticket for the first-ever Kanye West show.
All these benefits will lead to the establishment of NFTs in the event space.
7) Identity / Passports / Elections
Many administrative areas are still out of date and cannot cope with today’s challenges such as forged documents or the hassle of verifying all kinds of documents. There will be a time where every type of identification document such as driver’s licenses and passports will be protected using blockchain technology in form of NFTs. Furthermore, complex procedures like elections could benefit from the use of NFTs to organize elections much faster, safer, and cheaper.
III. reNFT
Currently, there are no income generation methods for NFTs except for the potential speculative price increase over time. reNFT aims to revolutionize the ever-expanding NFT market by enabling owners to generate revenue off their otherwise stale assets, and renters to use a variety of NFTs in experiences without having to be tied to owning a single one. The lender defines the rental price, collateral, and the maximum rental period. The renter specifies the rental duration, pays the collateral plus the rental price, and receives the NFT in full custody.
Depending on the value of the respective NFT, the amount of collateral required can sometimes be very high, so that renting is no longer an option for most people despite the possibly low rental fees. This is why we have developed our collateral-free integration tools to allow fully trustless NFT rentals for any project!
Simply put our collateral-free solution only needs to be supported by the respective game to load in rented assets. They can do this as easily as pinging our reNFT SDK. This allows the reNFT protocol to become a white label solution that can be integrated into any games front-end to enable full renting/lending capabilities.
Our collateral-free contract delegates out a “usage right” that is tied back to the rented original NFT. This right shows the asset, renter, rental duration, price, and expiration.
This is much more gas efficient than minting a duplicate wrapped NFT and by far the most efficient and easiest way to integrate NFT rentals into a project, and just one of many GameFi solutions we offer!
IV. Outlook
NFTs will change the way we deal with digital assets forever opening the door to TRUE ownership. They open endless new financial markets for people to participate, democratize industries and allow completely new ways for creatives, collectors, gamers, artists, and more to follow their passion. Be it trading cards or luxury goods, everything can and will be tokenized allowing people to either generate passive income through lending it out in some of the ways mentioned above or being able to promote their company to thousands of users worldwide by renting virtual ad spaces in the metaverse.
The NFT rental market will be an integral part of the new digital age and reNFT will be at the forefront of this revolution.
About reNFT
Let your stale NFTs generate revenue and rent NFTs temporarily.
The reNFT vision is to bring any asset that has a rentable use case whether in the digital or physical realm on-chain as an NFT for trustless, secure, and quick rentability. We see this as anything ranging from intellectual property rights, physical/digital real estate, to in-game item purchases in gaming experiences. We live at the intersection of NFTs and DeFi.
The initial and core reNFT product enables peer-to-peer renting of ERC-721 and ERC-1155 non-fungible tokens (NFTs) on Ethereum mainnet.
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