Cryptocurrency staking is an easy way to make a return of investment in the cryptocurrency space. Token owners simply have to stake at least a minimum number of tokens for a predetermined lock-up period and earn rewards thereafter. It is like depositing your money in a bank and earning interest after a certain period.
Non-Fungible Token (NFT) staking is a new development for NFT collectors which allows them to stake their blockchain-based NFTs and earn rewards.
What is an NFT?
NFTs are digital assets that are sold and bought using cryptocurrencies. NFTs can be anything digital like photos, audio clips, video clips, game items, and even tweets, and can cost thousands to millions of dollars. The non-fungible nature of NFTs means that each token is unique and only one person can own a particular NFT. They may be reproduced but the original still belongs to the owner.
Blockchain is the underlying technology that makes NFTs eligible for staking. But just like with cryptocurrencies, not all NFTs are eligible for staking
What is NFT Staking?
NFT staking is a way for NFT owners to earn a passive income and enjoy the perks that are offered by the NFT staking platforms. NFT staking makes the NFTs profitable instead of just letting these digital assets sit in their owner’s crypto wallet and remain dormant until the owner decides to sell them. NFT holders simply need to attach their NFTs to a staking platform and lock them up for a certain period and earn rewards in return. Factors like the APY (Annual Percentage Yield), the lock-up period, and the number of NFTs staked determine the rewards that can be earned. Like in crypto staking, the Proof-of-Stake is the mechanism behind the NFT staking.
How to Stake NFTs
NFT staking is still in its early stages, but there are already many collections that allow NFTs to be staked for rewards. To stake your NFTs, you need to attach your cryptocurrency wallet with NFTs to a platform or protocol that supports the NFT staking. Not all NFTs can be staked; the requirements would depend on the project. So, if you’re considering staking your NFTs, check out first which ones are eligible for staking. The lock-up period would also depend on the collection. Some may have a specific period before the NFTs can be unstaked while some may have indefinite lock-up periods.
Likewise, the collection will determine the reward rate. The reward rate varies per NFT and can be viewed on the staking platform. There are platforms that offer a higher APY rewards for those who stake multiple NFTs or for those who stake NFTs with higher rarity. Some platforms will display the APY, but some will only display the token rewards during the staking period. For example, instead of showing the APY, some platforms will show 10 tokens per day as the return.
How NFT Staking Works
As with cryptocurrencies, NFTs are kept on a compatible staking platform during the lock-up period through smart contracts. Only after the lock-up period can the NFTs be unstaked. NFTs start to earn rewards as soon as the lock-up period begins.
Unlike with crypto staking, the rewards may not necessarily be crypto coins in NFT staking. The type of reward will depend on the platform and the type of NFT staked. But usually, staking platforms pay out the rewards in their native utility tokens. Gaming NFTs are sometimes rewarded with boosters for their characters. The pay-out schedule is also determined by the platform. It could be daily, weekly, monthly, and at times, could be after the staking period.
Majority of NFTs on the NFT market belong to the various blockchain games and this opened staking opportunities for play-to-earn games such as The Sandbox and Splinterlands. In this platform, participants may be awarded with NFTs instead of crypto coins which is a great way to expand their NFT collections without spending too much.
NFT Staking Platforms
A large number of NFT staking platforms that support the play-to-earn NFTs have emerged due to the rapid growth of play-to-earn NFTs. Because the success of NFT staking is imminent, Crypto exchanges have also started integrating the NFT staking into their platforms. Here are some of the popular NFT staking platforms that you can consider:
MOBOX is a play-to-earn gaming metaverse built on Binance Smart Chain that allows the players to stake their NFTs called MOMOs and earn rewards in their native token, the MBOX. The MOMOs can be minted, earned, and purchased from the NFT marketplace. Staking MOMOs lets you farm MBOX. The more MOMOs you collect, the more rewards you can earn which are usually paid out daily.
Splinterlands is a collectible, multiplayer, NFT card game that operates on the Hive blockchain where players can buy and sell digital cards tagged with unique NFT identifiers. The native token is called SPS (Spinter shards) in which the users can stake not only to earn rewards but also to get special offers, bonuses, and promotions.
Doge Capital is an NFT collection of 5000-pixel arts built on the Solana blockchain network. The native token is DAWG in which the stakers can earn daily when they stake their NFTs. The NFT holders get five DAWG daily per NFT staked.
Binance’s NFT Powerstation
NFT staking is gaining popularity and crypto exchanges like Binance have developed ways for NFT holders to stake their digital assets in their platform. Binance is the first crypto exchange to offer the NFT charging services which they built on their Binance Fan Token Platform. A Binance Fan Token is the utility token issued by the sports clubs that the holders can use for discounts on tickets and merchandise along with many other perks.
Binance developed the NFT PowerStation, a feature on the Binance Fan Token Platform that allows the sports fans to charge the supported NFTs on the corresponding teams’ NFT PowerStation. Fans can power up their fandom and earn Binance Fan Token as rewards through the Binance’s NFT charging service.
NFT staking is a new and easy way for NFT holders to make their digital assets profitable due to its high returns. Although it’s still in its infancy stage, it has already gained popularity. Many platforms and crypto exchanges are already supporting the NFT staking in their platforms. If you have plans to venture into NFTs, it is best to check out those that can be staked so you can earn a passive income and earn back your investment in no time.