Miners earn rewards in the form of native cryptocurrency for dedicating resources. This model is called “Proof-of-Stake”, and the process is called “ staking ”. Likewise, NFTs can be pledged to support a project while earning passive income in terms of rewards or commissions for dedicating the asset to a blockchain.
Non-fungible tokens (NFTs) are unique cryptographic assets that represent ownership of a tangible or intangible asset and are therefore objects of value. The rarer the asset, the more expensive the NFT will be. But most importantly, they are blockchain-based assets that can also be put into play like other cryptocurrencies for considerable profits.
NFT was the buzzword of 2021, literally. The Collins dictionary named it “word of the year.” But the NFT has gained popularity not only because it is the first of its kind to provide demonstrable ownership of digital assets, but also because it can generate good returns.
For example, US-based Onessus Blockchain Systems’ WhenStaking platform had $2 million of its native cryptocurrency, VOID, locked in 9,000 NFTs in the first month of its launch. The value of NFTs has increased to $3 million.
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But what exactly is NFT staking and how does it produce such high returns? Let’s take a quick look.
What is an NFT scam?
Blockchains rely heavily on their global network of transaction validators that authenticate transactions before data is added to a block on a blockchain. These validators (or miners) are decided by the amount of cryptocurrency they commit to the functioning of the blockchain network. In exchange, miners earn rewards in the form of native cryptocurrencies for dedicating resources. This cryptocurrency staking model is called the “Proof-of-Stake” model, and the process is called “staking.”
Likewise, NFTs can be pledged to support a project while earning passive income in terms of rewards or commissions for dedicating the asset to a blockchain. Currently, the majority of NFT staking opportunities are found on play-to-earn gaming platforms such as Decentraland, Sandbox, and Axie Infinity, among others. All you need to gamble is a cryptocurrency wallet with NFTs.
More than 50% of the NFT market is attributable to in-game NFTs, which players can purchase using cryptocurrency. Axie Infinity, for example, has accumulated a sales volume of more than 2 billion since its launch in 2018.
However, it is important to note that not all NFTs can be staked. So you have to check the details before buying an NFT.
What is the profitability of NFT staking?
When stacking an NFT, the platform determines its value based on rarity and assigns it an annual percentage yield (APY). The rarer your NFT is, the higher the APY you get. The value of an NFT also depends on its ability to generate a stable income stream, such as royalties.
Where can NFTs be staked?
The two most popular betting platforms are:
Onessus: The WhenStaking platform allows the staking of all types of gaming NFTs on the Onessus blockchain through its native currency, VOID. Depending on the staking period, it offers up to 80% APY.
Only 1: This platform has a unique betting system based on social commitment. It allows multiple users to stake their native $LIKE currency on NFT creators of their choice. If the creator has high social media engagement with stakers, the APY offered is higher.
There are also a few others like MOBOX and Zookeeper. In India, Zionverse is one such platform where one can buy digital assets and place bets for passive profits.
NFTs continue to disrupt cryptocurrency markets as organizations pump funds into their development. Although it is in a nascent phase, the bet on NFT is capturing the imagination of investors who may be attracted by the high APYs. It is always advisable to educate yourself on the fundamentals of cryptocurrencies and blockchain before investing in NFTs or staking.