What is NFT Staking?



Another way to earn passive income in web3

NFTs are more than just digital art pieces people trade across the internet. Today, NFT staking is a viable tool for earning real rewards. Since the first NFT was minted and sold in May 2014 at the New Museum in New York City, more and more utility has been added to the blockchain tokens. Find out how you can add NFT staking to your web3 toolkit.

Summary

If you’re involved in DeFi, then you’ve probably heard about cryptocurrency staking. It’s the process of locking away your digital coins in return for rewards.

NFT staking works in the same way because NFTs are tokenized assets. The images that go with an NFT may be a jaded monkey or a pixelated owl. But underneath these pictures is code written to the ERC-721 standard that makes each NFT a unique asset.

Buying and selling NFTs through your DappRadar Portfolio

Getting in at the right time and earning the most rewards takes lots of research and a bit of luck. Blockchain technology enables people to offer up their assets in return for benefits determined by a platform. And various projects were built specifically with staking in mind.

NFT staking explained

NFT staking is locking away your non-fungible token onto a blockchain protocol, often in exchange for a reward. Developers use smart contracts to in order to deploy NFTs onto

NFT staking exists for a number of reasons:

  • To drive up scarcity. If an NFT is locked away, then it can’t be sold. If it can’t be sold, then supply goes down and prices go up.
  • For NFT holders to earn passive income. If there were no benefits of staking for the NFT holder, there would be no reason to do it. So when someone who owns an NFT locks it away, they are given something in return by the team behind the project.
  • To support Proof-of-Stake (PoS) networks. PoS is the mechanism that most blockchains use to validate transactions on the network. 

There are usually associated gas fees for anyone who wants to stake an NFT on a blockchain. This is because validators need payment as their reward for securing the network. So it’s gas fees that stakers are rewarded with.

Find out what your staking returns will be

Each NFT staking program offers different rewards, often in the currency associated with the project.

The Sandbox

Take The Sandbox as an example. The platform is due to introduce land staking this month. Land in the metaverse is really just an NFT that represents a location within the map of a virtual world.

Explained: DappRadar’s NFT Explorer

For anyone who stakes their land NFT in The Sandbox, they will be rewarded with the in-game digital currency, SAND. You can find out how much SAND is worth using our Token Explorer.

See also  The ‘launch of a rocket’ — Observers on the future of Ethereum post-Merge

The Sandbox has set aside $10 million worth of SAND to give out as rewards for people staking their land. The platform has announced what their annual percentage yield (APY) will be. They’ve also set the maximum amount of SAND users can earn per piece of land they stake.

SAND rewards for land staking in The Sandbox

Whenever a holder stakes an NFT, they should first find out what the associated staking costs are. It’s also important to find out if there’s a required staking period because some platforms have minimum amounts of time that users need to lock up their NFTs for. 

Finally, once you find how much it will cost you to stake and how long you need to do it for, look at what benefits you’ll receive. The Sandbox has a projected APR of 90% while.

Wolf Game

Another example is Wolf Game. DappRadar wrote about the play-to-earn back in November 2021. The in-game token is WOOL and users can stake their Wolf or Sheep for different rewards.

NFT staking rewards in Wolf Game

Holders of Wolves earn more than holders of Sheep. And Sheep stakers can also earn more WOOL by taking a risk and exposing their NFTs to danger. It’s Gamified Finance at its most fun.

The best projects for NFT staking

Not all NFT staking programs offer the same rewards. Some have high rates of returns at first but as their token floods the market, it drops in value. Other projects  

Always bear in mind that you should compare your rewards to the initial cost of the NFT. If you paid three times more for an NFT A than NFT B but A only give you two times more rewards than B, it will take longer to recoup your costs with NFT A.

Mutant Cats

Staking Mutant Cats gives holders fractionalized ownership of the project’s decentralized autonomous organization’s (DAO) vault assets. Every staked Cat also earns a yield of 10 FISH per day.

The collection consists of 9,999 NFTs and launched in October 2021. It’s backed by holdings of Cool Cats and the idea behind the project is to give people access to those assets without needing to buy one at a high price.

The team behind Mutant Cats also had a collection called Mutant Gorillas. Every staked Gorilla produces one SERUM after 60 days. SERUM is a tradable NFT and has the power to cure Mutant Cats.

NFT Worlds

NFT Worlds introduced staking in March with a total of 1.75 billion WRLD tokens on offer as rewards. The plan is to release those tokens over a five-year period and create a sustainable economy for a long time after.

See also  Business News | Stock and Share Market News | Finance News

Each piece of land in NFT Worlds has a rarity rating and stakers are rewarded with WRLD in proportion to that rating. The fewer land NFTs that are staked overall, the more those who do stake are rewarded.

Users who stake their land can also rent it out to other users at the same time. This adds an extra source of passive income and keeps NFT World holders further locked into the platform.

Axie Infinity

Axie Infinity started its own land staking program this month. There are five types of land NFT in the game: Savannah, Forest, Arctic, Mystic and Genesis. The cheapest ones currently on sale are 1.275 ETH ($2,000). 

Axie Infinity users first started buying land NFTs in January 2019, so utility for it has been a long time coming. The platform is offering the following rewards to users for staking their land NFTs.

NFT staking rewards in Axie Infinity

SkuxxVerse

SkuxxVerse is slightly different to most land staking opportunities. With this project, the SkuxxVerse team buys up NFTs and stakes them. 

Users can then buy a SkuxxVerse NFT pass which gives them access to a custom-built virtual world and, more importantly, a share of the staking rewards.

To date, SkuxxVerse has distributed over 1 million WRLD to its holders and has just launched its own virtual world inside NFT Worlds. Each SkuxxVerse pass holder will also get a free NFT representing a home in the metaverse.

CyberKongz

CyberKongz is an example of holders earning yield from their NFTs without needing to stake them. Holders of Genesis CyberKongz NFTs earn 10 BANANA a day, for a guaranteed 10 years. And they can burn the tokens they earn to give their avatars distinct characteristics.

At the peak of BANANA’s price in October 2021, CyberKongz holders were earning of $1,000 per day. Since then, the price has dropped off

There are two more characters in the collection: Baby Kongz and CyberKongz VX. Neither of these offshoot apes grant holders BANANA yield. But they do give access to exclusive groups.

The future of NFT staking

As NFT values have dipped and cryptocurrency prices have fallen off a cliff, the current outlook for NFT staking isn’t optimistic. Projects that performed exceptionally during the height of the 2021 bull run are now offering low returns.

But this doesn’t mean there’s no future for NFT staking. The next couple of years will see projects find new and better utility for their NFTs. And with this will certainly come staking programs. 

The goal for all new projects and platforms is to develop something that isn’t built purely on hype. Once they achieve this, then sustainable rewards from NFT staking become a real possibility.



Source link

We will be happy to hear your thoughts

Leave a reply

 
financetin
Logo
%d bloggers like this: