Everything You Need To Know About NFT Staking
Usually whenever non-fungible tokens (NFTs) are mentioned, the first thought would practically be of the link with art and collections that can become successful and valuable overtime. As the market grows, the creators and collectors are on the lookout for new uses for NFTs. One of these is staking.
What Is NFT Staking
NFT staking in easier words is locking an asset for a set amount of time and earning in the form of either money or cryptocurrency whilst doing so. It locks tokens in a digital wallet in support of a blockchains functions making it more secure, in exchange for rewards in return.
With NFT staking, some NFTs can have an unlimited lockup time, whereas other NFT staking has time limits during which they can stake for before not being able to do so.
How NFT Staking Works
Staking is something that is used in several blockchains. Examples have been in well known cryptocurrencies such as Ethereum. Staking is the most straightforward method for users to gain interest on their crypto by staking coins for some time to earn more coins, similar to earning interest in normal banks.
This is something that would be perfect for long term holders as they are able to make passive income from their assets whilst staking, rather than merely holding them in wallets.
NFT Staking Rewards
There are many types of NFT staking rewards. The kind of reward individuals can get would depend on the NFT itself and the platform it uses. Most of these platforms arrange for their users to be rewarded on a daily or a weekly basis.
The types of rewards depend on the NFT, however, most NFTs reward their users with a utility token which could come along with other benefits such as voting. There are many NFTs that also let their users stake these tokens themselves.
NFT Staking Platforms
There are many platforms where users can easily stake NFTs that they are collecting. Some of these are shown below.
NFTX is a platform where users are able to not only stake, but also buy, sell and even swap their NFTs.
One of the most appealing ways in which NFTX is known for is that they allows users to have access to well known blue chip NFTs such as Bored Ape Yacht Club without having to actually buy from its collection. Using NFTX, anyone is able to invest in NFTs whether they are long term holders, traders or just starting out.
Another platform is WhenStaking, which allows individuals to stake their NFTs from the Onessus blockchain. Users can play games to win and earn NFTs in return which can also end up being staked. Users are also able to use their NFTs as an asset in any game that they choose, by the use of a leased version of a token that is staked.
Another example of an NFT staking platform is ‘LooksRare’. This is an open market that has the potential to double an amount through staking. LooksRare are known for continuously rewarding their users. Individuals are able to earn the native LOOKS tokens by simply buying and selling NFTS through LooksRare, making them eligible for staking directly on the same platform.
Staking NFT Collections
There are many NFT collections that allow staking and are well known for this purpose. Some of these are mentioned below.
Firstly, there is CyberKongz which is one of the main NFTs collections subject to staking, who reward with their own cryptocurrency known as BANANA. Owners or traders are able to be rewarded 10 of these tokens per day. There are many platforms where CyberKongz can be bought from, including OpenSea.
Another NFT collection Is known as Mutant Cats. Individuals that hold Mutant Cats can stake and earn FISH in return, which is Mutant Cats own utility token. Mutant Cats is a collection of 9,999 pieces of art, and for each staked art, users are rewarded 10 FISH tokens per day.
In addition to the above, there is also Doge Capital which instead of on the Ethereum blockchain, is on the Solana blockchain. By staking these, holders are able to earn DAWG tokens. Similar to the cryptocurrency ‘Doge’, this NFT is also a meme token. There are many platforms where Doge Capital can be bought and staked, including Magic Eden.
Advantages of NFT Staking
There are many advantages and disadvantages of staking. Some of the advantages are explained below.
One of the main advantages of staking in both NFTs and cryptocurrencies is that users can earn passive income. Even if the value of the token could increase or decrease whilst staking, there is still an earning that one could receive through staking.
The rewards that come from staking are not only limited to crypto assets being earned, but there is a wider variety that different NFT tokens provide for their users. This could include the power to vote, and even possibility to have future authority in the project itself.
Disadvantages Of NFT Staking
Although there are benefits, there could also be disadvantages to consider when staking. These are shown below.
In cryptocurrency and NFTs, there are always risks of rug pull. This in other words is when the creators of NFTs leave projects, even scamming users by taking all the income. If one stakes their assets and a rug pull occurs, they would be left with worthless NFTs.
When staking, individuals are unable to sell their assets for a set period of time. During this time, it is possible that the price of the asset could rise or decrease in value, and due to staking there is no way to sell in this situation. However, for long term holders this would be less of a worry.
Overall, NFT staking is being able to lock up assets for a certain period of time along with being able to earn different types of rewards. There are many benefits as well as disadvantages that come along with this as discussed above. It depends on an individual as to whether or not they want to take part in NFT staking. There are risks with anything in the crypto world really, this could be a risk worth taking or it might be something to think about twice.