Most crypto fanatics are familiar with staking cryptocurrencies, which is a way to make extra return on their investments. In addition to staking cryptocurrencies, users can now also make extra returns on non-fungible tokens (NFTs).
What is NFT staking? #
NFT staking is a method where investors strive for different ways to create more value with their NFTs. In addition to speculating on an increase in value, the staking reward is also a way to earn more. When talking about NFTs, digital images often come to mind, such as CryptoPunks or the Bored Ape Yacht Club collection, but not only images can be used as NFTs. NFTs can demonstrate digital ownership of both physical and online products.
When suspending NFTs, investors can lock their NFTs on suited platforms or protocols. Locking NFTs ensures investors that they receive rewards. These so-called staking rewards provide an extra return, while the investor remains the owner of the NFT. This method is often compared to yield farming, in which crypto currencies are lent or deposited in liquidity pools to earn rewards through interest or transaction costs. Saving at the bank also resembles an NFT staking, but the major difference lies in the central character. Banks are a lot more central than the NFT platforms that offer NFT staking.
How does NFT staking work? #
Because both cryptocurrencies and NFTs are tokenized assets, both options can be staked. However, this is not possible on every platform for both cryptocurrencies and NFTs. The blockchain on which the tokenized asset is located, for example, plays a role in this. In the first instance, the discontinuation of NFTs is very similar to the discontinuation of crypto, but nothing could be further from the truth.
This makes it easy to sell cryptocurrencies to another party, and they can also be purchased very easily. There are millions to trillions of different tokens, with thousands to millions of people trading these coins. With NFTs, however, you are looking for specific buyers who would like to buy exactly that one NFT. This makes it difficult to sell NFTs, which can actually be positive for NFT staking. If an owner can’t get their NFT sold, and if he has the right NFT, he can still make a profit by staking the NFT.
When staking it is important that you have a crypto wallet. After all, you need a safe place where you can place the NFT after the sale. The underlying network is important here. Your crypto wallet and the NFT itself must be able to work properly on the blockchain that you would like to use. Despite the differences, the actions of staking NFTs or cryptocurrencies are similar. On your suitable platform, look for the staking section, and then stake the NFT in this section.
Rewards for staking NFTs #
The rewards for discontinuing NFTs can be very different. For example, it is possible to earn certain tokens, but it is also possible to earn NFTs. In addition, the frequency of the payout is also different. It is therefore wise to thoroughly investigate these aspects beforehand. Regardless of the reward, there is always a way to convert this reward into fiat money. If this is you, you can convert your crypto and NFTs into dollars!
NFT staking platforms are decentralized autonomous organizations (DAOs), where the NFT holders can stake their NFT. By staking in this DAO pool, also known as staking pool, holders can then participate in managerial tasks. This allows you, for example, to make proposals within the DAO, or to vote on other people’s proposals. If you want to strike NFTs and go for influence or hard hitting is completely up to you, where a combination of the two is also possible.
