NFT Staking: Earning Passive Income through NFTs
In the crypto sphere, “staking” is a way of generating passive income. It is a relatively simple procedure wherein a stakeholder earns rewards through their cryptocurrency holdings. And similar to crypto staking, NFT staking is an additional way to earn passive income by generating rewards.
In this article, we look at how staking works for NFTs, and which platforms currently facilitate staking.
What is NFT staking?
NFTs are tokenized assets that allow the buying and selling of digital assets, as well as real-world assets like real estate on a decentralized infrastructure. With NFTs, the asset holder gets the sole proprietorship of the asset. Unlike fungible tokens like fiat money (USD) or cryptocurrencies, no two NFTs are similar and they cannot be replicated.
NFT staking allows users to earn rewards as a means of passive income without selling their NFTs or transferring their ownership. Stakers earn rewards for holding or locking their NFTs in the platform. This secures the network and in return for offering security, the NFT token holders earn rewards.
The rewards depend on the NFTs staked or total value locked (TVL), the staking duration, and the APY or annual percentage yield. Stakeholders can earn without losing their ownership.
How does NFT staking work?
Similar to cryptocurrencies, NFT staking operates on the proof-of-stake (POS) consensus algorithm. Each new transaction is recorded in the blocks generated in the blockchain network. Holding NFTs gives power to stakeholders to validate the blocks. PoS allows validation of each new block that is generated in the blockchain. Validators are randomly selected and earn staking rewards. The more you stake, the greater the chances of winning rewards.
Where to stake NFTs?
Where you can stake your NFTs will vary from contract to contract. Some NFT contracts will require holders to send their tokens to a specific address, while others allow investors to use any compatible wallet.
- NFT protocols — Platforms like NFTX provide holders with the ability to stake their NFTs. In return, users earn trading fees from the platform.
- DeFi platforms — Some DeFi platforms like Kira allow users to deposit NFTs to receive their native tokens or stake native tokens to receive NFT as rewards. The reward rates depend on the total tokens locked and how they contribute to increasing the network’s activity.
- Play-to-earn games — At present, NFT play-to-earn games offer staking rewards for users. Examples of gaming NFTs are MOBOX and Zookeeper.
MOBOX
Built on the Binance Smart Chain ecosystem, MOBOX is a DeFi gaming platform. MBOX is the official token of the platform. NFT stakeholders can stake and earn rewards in MBOX. The MOBOX metaverse, also known as the MOMOverse, offers NFTs called MOMOs. You can stake MOMOs and earn rewards in MBOX tokens. The more your stake, the more the rewards.
MOMO NFTs can be staked in MOBOX’s partner platforms like PancakeSwap. You can partner with PancakeSwap and earn staking awards by participating in online gaming battles and earning MBOX rewards.
Zookeeper
Zookeeper is another NFT gaming platform that stakes NFTs in liquidity pools. ZOO is the official token of the platform. You can lock tokens for a certain period and earn ZOO token rewards. Alternatively, they allow users to stake NFTs called ZooBoosters that reduce the locking period and increase the stake rewards.
Bottom line
NFT staking is still in its infancy, but it is creating new opportunities. More investors are entering the market to explore and earn rewards on the NFT platform. The greatest advantage of NFT staking is there is no need to sell or transfer the ownership of your NFT assets. You can lock your NFT tokens and earn rewards for providing security to the blockchain network.
Originally published at https://www.cryptohopper.com.
