You probably haven’t noticed this yet, but non-fungible tokens (NFTs) represent an opportunity to generate undeveloped passive income.
Read on to learn how to make passive income with NFTs using different methods that actually work.
The fusion of NFT technology and decentralized finance (DeFi) protocols has opened up the possibility of staking NFTs.
Staking is commonly used in the Proof of Stake (PoS) protocol, where users commit tokens to protect their networks and validate transactions. However, there are other forms of staking, such as locking crypto assets with DeFi protocol smart contracts and generating yields in return.
Similar to crypto asset staking, NFT staking allows you to generate passive income in the form of reward staking while retaining ownership of tokens.
Steaking NFTs can be a good strategy if you plan to retain them for the long term. This is because you cannot trade steaked NFTs. NFT staking platforms often investigate the rarity of NFTs and calculate APY (annual interest). The higher the rarity, the higher the APY and the higher the staking reward.
Currently, there are several platforms that support NFT staking. Kira Network, NFTX, Axie Infinitymore.
On some GameFi platforms, you can earn passive income from NFTs by lending digital collections to NFT gamers. This is a new trend in blockchain game space, as utilities derived from gaming NFTs offer attractive revenue opportunities. As a player, you can rent an NFT to improve your overall gaming experience.
You can rent items such as character skins, innovative weapons, and unique tools to unlock new in-game features. For example, in some card trading games, you can rent an NFT card to increase your chances of winning. Smart contracts are used to manage transaction terms such as lease terms and lease payments.
reNFTFor example, is a rental protocol that allows you to rent and lend NFT assets. To rent an NFT, specify the rental period, pay the prescribed collateral, and receive the borrowed NFT.
Earn royalties from NFTs
The NFT industry is estimated to have generated billions of US dollars in revenue in 2021. Creators are trying to get some of their profits by bringing digital art to market. One way to do this is to generate passive income through NFT royalties.
As a creator, you can set conditions for imposing royalty fees whenever an NFT is traded in the secondary market. In this way, you can permanently gain a share of the NFT selling price.
For example, you can set the NFT royalty to 5%. This means that every time a digital artwork is sold to a buyer, you will receive 5% of the actual selling price.
The appeal of NFT loyalty is that the entire process of enforcing loyalty terms, tracking payments, and making payments is automated by smart contracts.NFT Marketplace such as rare Allows creators to earn loyalty from their artwork.
Providing liquidity by NFT
With the continued integration of NFTs into the DeFi ecosystem, you can provide liquidity to your DeFi pool and earn NFTs in return.
For example, to provide liquidity Uniswap V3 LP-NFT tokens are issued on decentralized exchanges. This is an ERC-721 token that gets the amount locked in the pool. You can sell this NFT in the secondary market and liquidate your position in the liquidity pool.
Besides earning encoded royalties from your own NFT, all other current passive income strategies, including NFTs, typically deposit NFTs on smart contracts in the DeFi market, which poses a relatively high level of risk. To do. As with all DeFi and investment activities, there are risks that investors need to know before introducing capital or NFTs.
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