Non-Fungible Tokens (NFTs) are one-of-a-kind cryptographic assets that reflect possession of a tangible or intangible object and so act as value stores. The NFT becomes more valuable as the asset becomes more scarce. They’re blockchain-based assets that anyone can claim to generate significant profits, just like other cryptocurrencies.
Last year’s buzzword was NFT. Collins Dictionary selected it as the ‘Word of the Year.’ However, NFT has grown in popularity not just because it is the first to guarantee proven digital asset ownership but also because it is profitable.
Within the first month of its introduction, the WhenStaking platform of Onessus Blockchain Systems in the United States had $2 million of its native coin, VOID, locked in 9,000 staked NFTs. As a result, the NFTs now have a market worth $3 million.
But what is NFT staking precisely, and how does it provide such significant returns? Let’s take a look at it.
NFT Staking
The ability to stake NFTs is one of the advantages of NFTs and decentralized finance (DeFi) protocols. Depositing, or “locking away,” digital content into a DeFi protocol smart contract to gain profits is staking.
While some platforms will let you use any NFT, others will require you to buy native NFTs to gain staking token incentives (generally priced in the platform’s native utility token).
In exchange for contributing resources, miners receive the local cryptocurrency. The ‘Proof-of-Stake’ consensus mechanism, used by many popular blockchains, is also a form of staking.
Blockchains rely primarily on a worldwide network of transaction validators to verify transactions before they are included in a blockchain block. Validators (or miners) are chosen depending on the amount of Bitcoin they promise to the blockchain network’s functioning.
With staking, you can donate NFTs to a project while earning passive income from awards or fees for committing the asset to a blockchain. NFT staking is now available on play-to-earn (P2E) gaming platforms like Decentraland, Sandbox, Axie Infinity, etc.
In-game NFTs, which gamers may purchase with cryptocurrencies, account for more than half of the NFT market. Since its inception in 2018, Axie Infinity, for example, has amassed a sales volume of over $2 billion.
However, it is crucial to remember that not all NFTs can be staked. As a result, you should double-check the details before purchasing an NFT.
How NFT Staking Works
When you stake an NFT, the staking platform calculates its value based on rarity and an annual percentage yield (APY). The APY increases as your NFT becomes rarer. The ability of an NFT to create a consistent revenue stream, such as royalties, also determines its worth.
Where Can You Stake NFTs?
There are many platforms for NFT staking. Let us look at some of the platforms and their pros and cons.
Onessus
Many different NFTs from the Onessus blockchain games can be staked using the WhenStaking platform’s currency, VOID. Depending on the staking time, it pays up to 80% APY on NFT staking.
Advantages
These are the important characteristics that give this NFT staking platform an edge over others:
- A built-in lending system that allows gamers to rent NFTs. Gamers will always be able to use the utility of the NFTs.
- Staking NFTs rewards NFT holders with EXP, encouraging them to stay locked for a more extended period. EXP tends to increase as you level up from Level 1 to Level 50.
Disadvantages
The mechanism of staking VOIDs with NFTs is a big drawback that deters people. However, you can collect your NFTs and VOID tokens after the lock-up time.
Only1
This platform offers a one-of-a-kind staking mechanism built on social interaction with content creators. It allows users to stake $LIKE on NFTs by content creators of their choosing. The APY given is higher if the creator has a high social media involvement with the investors.
Advantages
- It is a remunerated system in which creators and consumers are compensated for their time and attention.
- Its users are not under duress and are not required to pay third parties to make their content popular to generate revenue.
Disadvantages
The apparent downside of utilizing this NFT is that it encourages more researchers to experience the network, which can eventually decrease the worth of the token. However, the bigger the number of users, the better the usability.
KIRA
Kira is one of the most impressive NTF systems available. First, users must move their assets from their DeFi wallet to the KIRA Network to utilize Kira. Following that, a request is made. After the request has been accepted, KIRA Network Governance can process and approve it by assigning a relevant interest.
Advantages
The use of KIRA comes with several advantages. Some of them are listed below:
- Even with its unique traits, such as the lack of staking limitations, it provides extra protection with its multi-layer security.
- It rewards and incentivizes NFT holders while offering its customers a stable income.
- Its governance can determine a certain pace that affects its networking.
- Disadvantages
The current setback is a lack of public awareness. A few people have shown some interest, but that’s it. Kira will have to step up its marketing game to become known in the NFT space.
