NFTs are not just digital artworks that people trade on the internet. Today, NFT staking is also a viable tool for real rewards. Since the first NFT was minted and sold at the New Museum in New York City in May 2014, more and more utilities have been added to blockchain tokens. Learn how to add NFT staking to your Web3 toolkit.
If you’ve been involved in DeFi, then you’ve probably heard of cryptocurrency staking. This is a process of locking your digital currency in exchange for rewards.
Since NFTs are tokenized assets, NFT staking works the same way. The images that come with NFTs are code written according to the ERC-721 standard, which makes each NFT an independent asset.
It takes a lot of research and a little luck to join at the right time and get the most rewards. Blockchain technology enables people to offer their assets in exchange for benefits determined by the platform. Various projects are built specifically for staking.
Understanding NFT Staking
NFT staking is the locking of non-fungible tokens onto a blockchain protocol, usually in exchange for rewards.
There are many reasons why NFT staking exists:
- exacerbate scarcity. If the NFT is locked, it cannot be sold. If it can’t be sold, then the supply will fall and the price will rise.
- Earn passive income for NFT holders. If staking doesn’t do any good for NFT holders, then there’s no reason for them to. So when the person who owns the NFT locks it up, the team behind the project gives them something in return.
- Support for Proof of Stake (PoS) networks. PoS is the mechanism that most blockchains use to verify transactions on the network.
For anyone who wants to stake NFTs on the blockchain, there is usually an associated fee. This is because validators need to be paid as a reward for securing the network.
Know your staking rate
Each NFT staking program offers a different reward, usually a currency associated with the project.
Take The Sandbox for example. The platform will introduce land staking in July. A land in the metaworld is really just an NFT representing a location in the virtual world map.
Any player who stakes NFTs in The Sandbox will be rewarded with the in-game digital currency SAND. You can use our Token Explorer to understand the value of SAND.
The Sandbox has set aside $10 million worth of SAND as a reward for those who stake the land. The platform has announced what its annualized yield (APY) will be. They also set the maximum amount a SAND user can earn on each piece of land they hold.
SAND Rewards for Land Staking in The Sandbox
Whenever holders stake NFTs, they should first find out what the associated staking costs are. It is also important to determine if the necessary staking period is necessary, as some platforms have a minimum period of time that users need to lock their NFTs.
Finally, once you’ve figured out how much staking will cost and how long it will take, see what benefits you’ll get. The Sandbox has an estimated annual interest rate of 90%.
Another example is Wolf Game. DappRadar wrote about play-to-earn 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 Wolf earn more than holders of Sheep. Sheep stakers can also earn more WOOL by taking risks and exposing the dangers of their NFTs. This is fun gamified finance.
Best Projects for NFT Staking
Not all NFT staking projects offer the same rewards. There are other projects that start out with a high rate of return, but as their token floods the market, its value drops.
Always keep in mind that you should compare your benefits to the initial cost of the NFT. If you pay NFT A three times as much as NFT B, but A only rewards you twice as much as B, it will take longer to recover the cost with NFT A.
Staking Mutant Cats gives holders partial ownership of the project’s Decentralized Autonomous Organization (DAO) vault assets. Each staked Cat can also earn 10 FISH per day.
The series consists of 9,999 NFTs and will be launched in October 2021. It’s backed by Cool Cats, and the idea behind the project is to give people access to these assets without paying a premium.
The team behind Mutant Cats also has a collection called Mutant Gorillas. Each staked Gorilla will generate a SERUM after 60 days. SERUM is a tradable NFT with the ability to heal Mutant Cats.
NFT Worlds launched a total of 1.75 billion WRLD tokens as incentives in March. The plan will release these tokens within 5 years and create a sustainable economy long after that.
Every piece of land in NFT Worlds has a rarity level, and stakers are rewarded with WRLD based on that level.In general, the less land NFTs are staked, the more rewards those who participate in staking will get.
Users who hold land can also lease it to other users at the same time. This adds an additional passive income stream and further locks NFT World holders into the platform.
Axie Infinity launched its own land staking project this month. There are 5 types of land NFTs in the game: Savannah, Forest, Arctic, Mystic and Genesis. The cheapest price currently on sale is 1.275 ETH ($2,000).
Axie Infinity users first started buying land NFTs in January 2019, so its usefulness has been around for a long time. The platform provides the following rewards for users who pledge land NFTs.
NFT Staking Rewards in Axie Infinity
SkuxxVerse is slightly different than most land staking mechanics. Through this project, the SkuxxVerse team purchased and staked NFTs.
Users can then purchase SkuxxVerse’s NFT passes to enter a custom virtual world, and more importantly, they can also enjoy the benefits of staking.
To date, SkuxVerse has distributed over 1 million WRLD to its holders and has just launched its own virtual world in the NFT world. Each SkuxxVerse pass holder will also receive a free NFT representing a home in the Metaverse.
One example is CyberKongz, whose holders can earn from NFTs without staking. Players who hold Genesis CyberKongz NFTs can earn 10 BANANA per day and are guaranteed to last for 10 years. They can also burn earned tokens to give their NFTs unique characteristics.
In October 2021, the price of BANANA peaked, and holders of CyberKongz could earn $1,000 per day. Prices have dropped since then.
There are also two characters in the series: Baby Kongz and CyberKongz VX. Neither type of fork brings BANANA output to the holder. But they do give exclusive group access.
The future of NFT staking
With the decline in the value of NFTs and the collapse in the price of cryptocurrencies, the current NFT investment prospects are not optimistic. Projects that did well at the peak of the bull market in 2021 are now having low returns.
But that doesn’t mean NFT staking has no future. Over the next few years, projects will find new and better utility for their NFTs. Undoubtedly, a staking scheme must follow.
The goal of all new projects and platforms is to develop something that is not just based on hype. Once they achieve this, sustainable returns from NFT staking will become a real reality.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/article-understanding-nft-staking-another-way-to-earn-passive-yield-in-web3/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.