Earn Passive Income With Your NFTs With NFT DeFi Staking

Bishal Kumar Chanda
22.01.2022

Are you building an NFT portfolio with NFTs from across notable projects? Did you know that you can generate juicy passive income with your priced digital assets? The excitement and fun that come with getting your hands on these pixel gold are unmatched. It is easy for people to get immersed in the artistic value and exclusive benefits paired with NFTs. Most of us don't even think of utilizing these tokens in any other way. However, some blockchain platforms have come up with another great utility for your NFTs with staking.


What are NFTs?

Non-fungible tokens (NFTs) are unique ERC-721 tokens on the blockchain that proves the ownership of any valuable tangible or non-tangible assets. Anyone can mint an NFT on the blockchain, and it can represent anything from the ownership of the real estate to physical artworks, digital artwork, and even in-game items. 

Depending on the utility and rarity of an NFT, the investment potential can be huge. Many NFT enthusiasts worldwide have earned millions by reselling their NFTs after a few months of purchase. But what if we told you that you could generate passive income from your digital assets while you HODL them?

(Want to know more about NFTs? Please read our guide on: What are NFTs: How They Work and Why They're a Game Changer)

NFT staking is one of the best ways to make your cryptographic pixels more profitable. For most NFT collectors, the journey usually involves getting their hands on one or more high-tier NFTs. These NFTs are sold in the secondary market or remain entirely dormant in the owner's wallet. There is a better way for NFT holders to put their digital assets to work and generate passive income through staking. Let's explore all the possibilities of staking your NFTs while retaining their ownership.


What is NFT Staking?

Before adding any data on a blockchain, it goes through a global network of transaction validators for authenticating the transactions. The authenticators (or stakers) are selected based on the amount of cryptocurrency they stake towards validating the transactions. In return, the stakers are rewarded in native cryptocurrency for contributing to the transaction. This method of validating blocks of transactions by locking up your crypto assets is known as the Proof-of-Stake model.

Like any crypto staking, NFT staking involves locking up your non-fungible digital assets on a blockchain protocol to generate interest. Staking is one of the main ways investors earn profit in the crypto space as it is low risk, high reward, and very secure. Duration and yield of staking are generally predetermined to make it a transparent process. In fungible crypto staking, more yield is given to those who stake more coins. Then how are NFTs staked as they are non-fungible and unique? 


How Does NFT Staking Work?

Unlike popular cryptocurrencies such as Ethereum and Bitcoin; NFTs can not be grouped for staking as they are "non-fungible". Due to this non-fungible nature, it is difficult to determine a general yield of NFTs even if they belong to the same project. Many blockchain projects have developed their methods to evaluate the worth of individual NFTs and determine their yield.

The NFT staking platforms available in the market has an in-built mechanism for assessing the worth of your NFT. It determines the yield value your NFT can provide, depending on the duration you want to lock it up for. The NFT staking platforms are generally highly secure, but you should do your research to ensure their smart contracts are audited. If you own a rare NFT artwork from a famous collection or a popular NFT game asset, gaining an annual yield of 100% is no big deal.


Where Can You Stake Your NFTs?

As we mentioned earlier, NFTs are "unique" or non-fungible, so you can not stake them on most DeFi platforms where you commonly stake other cryptocurrencies. However, there are many platforms on the blockchain with dedicated NFT staking protocols. Before transferring your NFTs, you must always check if it's stakeable on that particular platform. Here are some of the most popular NFT staking platforms you can try.


Onessus

Onessus is a blockchain-based gaming platform that is sustained by NFT creation. For staking NFTs of the blockchain games on the platform, Onessus has a dedicated NFT staking platform known as WhenStaking. In the WhenStaking platform, you can stake NFTs from any of Onessus' blockchain games and earn its native utility token (VOID). You can easily connect your WAX Cloud Wallet to WhenStaking and take your NFTs for a yield. While your NFTs are staked on WhenStaking, Staking will not hamper your game activities as you can still use them for gaming. Depending on the lockup period, WhenStaking can offer you an upward of 80% APY. However, one drawback of Onessus' WhenStaking is that it only supports staking of in-game NFTs from the Onessus blockchain.

KIRA

KIRA is a DeFi platform built on Web3 Foundation that provides interoperability across different web3 platforms. Any NFTs on the KIRA platform can be staked to provide network security while you benefit from the yield. With KIRA, fractionalization of NFTs is also possible. Using KIRA, you can split your NFTs into smaller parts and mint them as individual NFTs. You can then utilize these fractionalized NFTs for trading and lending. On KIRA's staking platform, you can stake any NFT to earn $KEX tokens (KIRA's native token). The $KEX token holders can stake their $KEX tokens on KIRA to get KIRA's native NFTs as staking rewards.

Splinterlands

Splinterlands is a popular trading card game on the blockchain that can gain more significant momentum with its NFT staking option. In Splinterlands, every card you collect is an NFT which you can stake in a liquidity pool so other players can borrow and play with your staked cards. The Hive blockchain Splintercell runs on has more than 120 titles, allowing Splinterlands to have fast and scalable solutions. Splinterlands is a fun-to-play game with a combination of NFTs, play-to-earn, and staking models, which can give you a lot of profits.

Only1

The Alameda Research-backed Only1 is a unique staking system based on NFT-powered social engagement. The Only1 platform is built on Solana, and you can stake its native token $LIKE on NFT creators of your choice. Your APY depends on the social media engagement of the creator on the Only1 marketplace. On Only1, creators can mint and sell their NFTs and use it as a social media platform for engaging with fans. The staking rewards are split between the creator and stakers. 

NFTX

As an NFT owner, you can lock up your NFT in a vault on the NFTX platform and mint a fungible ERC-20 token (vToken). The vToken represents your claim on a random NFT from the NFTX vault. By staking your NFTs on NFTX, you can earn the protocol fees and trading fees, providing you with more liquidity. NFTX is a community-driven protocol that runs on the Aragon blockchain. It supports all NFTs minted before the ERC-721 standard, with many NFT whales in their investors' list.

Why should you stake your NFTs?

Additional revenue stream: While staking your NFTs, you lend your crypto tokens to the blockchain network and get an interest in other tokens. The main goal of staking your NFTs is to earn these rewards in cryptocurrencies or newly minted NFTs. As an NFT collector, you can make an upward of 100% APY risk-free when you stake your NFTs instead of just holding onto it.

Get more NFTs: When you stake your NFTs on specific platforms, you might get rewarded with other unique NFTs or a whitelist spot in a famous project. The NFTs you get as a reward may come with exclusive ownership benefits, and you can profit from re-staking it or just selling it.

Increased Liquidity: As you invest in more and more NFT projects, the liquidity of your portfolio keeps going down. Most NFT investors feel stuck with their rare NFTs as they wait for their prices to increase. With the help of NFT staking, you can stake your rare digital assets and increase the liquidity of your portfolio.


Final Words

Although the concept of NFTs is in its infancy, NFTs are highly desirable and disrupting the crypto market as big investors keep finding their development. Reselling NFTs has been the go-to method for investors to see a return on their investments, but now anymore. You can now earn passive income while holding on to your rare virtual assets as you wait for their value to increase. You might not have bought your NFTs to stake them, but it adds incredible growth to your portfolio. NFT staking is still a new concept under development, and you should do proper research on the platform before taking any of your NFTs. 

Apart from NFT staking, you can also earn through lending your NFTs. For more information on NFT lending, read: How to Lend Your NFTs and Earn Crypto.

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