Have you ever had something that you love dearly but would also make you significant amounts of money if you sold it? Well, what if you could keep it AND still make money off of it? That’s what NFT staking means in basic terms. NFT investors have been doing it for a while now to generate passive income. But, others are saying it’s dead and a scam to stack up NFTs and cryptocurrency. So, does NFT staking still work, or is it ghost work ? Let’s see.
What is NFT staking?
NFT staking means that you deposit a cryptocurrency on a blockchain and then receive rewards for not selling it when it’s staked. The duration you keep a non-fungible staked is called “lockup period”. The lockup period can vary from days to years. Moreover, there are specific platforms on which you can stake NFTs. Just like in a bank where you’d earn an interest if you deposit money for a certain amount of time.
In this case, you place the NFTs on a DeFi platform where they are staked using a smart contract in a liquidity pool. You, as a depositor, own rewards based on the system’s protocol. The rewards are either the platform’s native coins or NFTs. Some coins also have specific perks attached like voting rights on the platform.
Moreover, NFTs’ yields vary according to the platform and project. Annualized percentage yield (APY) is the amount you expect in return on a staked NFT. Some projects have really high APY which in some cases can be fishy and suspicious. Each protocol calculates APY differently. And the NFT’s price and rarity affect the yield return. The cryptocurrency’s volatility can also affect the rewards.
Furthermore, creators use NFT staking to increase the scarcity of an NFT. When you’re locking an NFT away, you can’t sell it. If you can’t sell it, the supply of this NFT goes down and its price automatically goes up. Investors and creators also use NFT staking to support proof of stake networks which is what most blockchains used to validate transactions.
Where can you stake NFTs?
The demand on NFT staking has increased considerably since the start of the tokenized world. Therefore, there are actually multiple platforms for NFT staking. Some of which are the following:
Launched in January 2021, NFTX is a platform for creating liquid markets for illiquid NFTs. On this platform, you can stake the tokens in NFTX vaults. Anyone can create a vault for any NFT asset on Ethereum. In return, you get a fungible token (vToken) that is tradeable. You can also use the vTokens to redeem specific NFTs from the vault.
Kira network is a layer 1 network hosts, powers and secures DeFi applications with value of real assets on stake. On this network, you can stake NFTs and you’ll get fungible tokens. The fungible token will be tradeable and divisible which means fractional shares can be created from them.
Band Royalty is a music NFT platform that allows staking NFT from its limited collection. You can buy music NFTs and stake them in royalty pools in order to get a share of the revenue generated by the music albums. If the music library grows, the royalty income stream increases for NFT investors. The lockup time period ranges from 90 days to 5 years. Royalty gives you the reward after the lockup period is over.
Onessus is a play-to-earn game that allows NFT staking with the combination of its in-game cryptocurrency. The platform pays you upfront when you stake an NFT. VOID is Onessus’ native utility token and provides utility across all the brand’s products.
Splinterlands is a collectible card game built on the Hive blockchain. It has more than 500 cards that you can collect and use in battles. Splinterlands’ native coin is SPSS (splinter shards) which you can stake to earn rewards, promotions, bonuses, and get special offers.
Best NFT collections for staking for 2022
Now that you know how and where to stake NFTs, you might want some NFTs to stake. The thing is, you can’t stake any and all NFTs. And, even if some can be staked, they might not generate that much income. Also, each NFT has different characteristics and each person has different interests. For example, if you’re into gaming, you’re more likely to stake gaming-related NFTs.
No matter which direction you want to go in, one thing is certain. You need to research. You must know what you’re looking for, what you’re interested in and what are the most profitable routes. To give you a head-start, I’ll list you some of the best NFT collections for staking.
Tomadoge is one of the best staking crypto projects of the year. This project has TAMA meme coins, NFT ownership and play-to-earn gaming perks. Since its launch at the beginning of September, TAMA has returned almost 2,000% gains for early investors.
Silks is a play-to-earn game that actually stands out. This game sees players buy, trade, breed, and race thoroughbred racehorses. The actual cool thing about it is that it mirrors real-world horse racing. And, if your horse wins in real life, you get rewards as the owner of the metaverse version.
Lucky Block launched in 2022 and is now among the most popular crypto projects. They regularly host competitions and offer the holders a chance to win prizes. And, as an investor you can earn rewards just by participating.
Quint is one of the coolest NFT projects distinguishing itself from the rest with a nice twist. The twist is that their staking pool offers rewards in digital tokens but you can also claim real-world collectibles. These can be stays in known travel destinations, supercar experiences, discounts on hotel booking, restaurants and more.
Is NFT staking dead?
Well, before we cremate NFT staking, let’s think of the pros and cons. The positives are that you can generate passive income and be part of a community in which you have governance rights and more. The negatives are that rugging is still a risk. Even if your NFT is staked, if the project creators pull a rug pull you’ll get swept away too. And, while your NFT is staked the price can drop or increase drastically which can potentially make you lose money.
It does seem that the positives outweigh the negatives as there is a risk in literally anything. Especially when it comes to investing, you can’t run away from risks. However, NFT God recently noted via a tweet that NFT staking is dead and there’s no utility in it. This has sparked controversy in the NFT space.
NFT staking is dead
People have figured out it's not real utility
It's a way to bribe you with made up tokens
People hate when their government prints money, but love when their project prints tokens
It's time to ask for more from our projects
— NFT God (@NFT_GOD) October 31, 2022
Some are saying that NFT staking is just a tactic creators do to drive the NFT supply down, keeping holders from listing their NFTs. As already discussed, this increases the price of non-fungibles. So basically a well-polished manipulation. However, others are saying that it depends on the project itself and what it presents. Just because many rug pulls occurred, it doesn’t mean that NFT staking is bad.
Basically, utility is in the eye of the beholder. You really are the key decision-maker when it comes to NFT staking. If it’s personally useful for you, go for it. If not, then don’t. In all cases, make sure you research before investing in anything.
Lastly, one thing is for sure, NFT staking is still very much a thing. The recently launched project, Art Gobblers, which is receiving a lot of hype is based on staking. You can read all about the project here.