Before we dive into the exciting new world of NFT Staking, we should probably appreciate how far NFTs have come so far. It’s been a wild couple years for what until recently was considered science fiction.
People all over the globe are now trading pixelated GIFs of crypto-thugz, taking ownership of virtual farms, acquiring digital NBA player cards, and buying up a variety of monkey pics all over the place.
Some 12 year old kid even made $400,000 by drawing weird looking whales. Good for him.
And while this has all been fun and games, at the end up the day, unless you’re able to sell your NFT to the next guy, you’re pretty much stuck with it.
Sure, that weird whale is yours. 100%. The Ethereum blockchain proves it. But other than that, it just.. sits there.
At least that was true until someone came up with the idea of staking NFTs.
Yes. The future is now.
So how does NFT staking look like in real life, you rightfully ask?
Is it… Pixelated whales that produce more pixelated whales?
Is it a cash-pumping whale?
What are we talking about here exactly?
Table Of Contents
What Is NFT Staking
The process of Staking an NFT works similarly to regular crypto staking.
In NFT Staking, you commit your NFT asset into the staking protocol, locking it for a set duration of time. Your NFT is then illiquid (you cannot sell nor trade it) and it produces profits – usually in the form of the native currency of the platform you’re staking on.
While in crypto staking, the amount of yield you generate in absolute terms depends on the size of your stake and its duration (32 ETH staked will generate more ETH per year than 16 ETH staked), with NFT staking, your APY (Annual Percentage Yield) is calculated a bit differently.
The collection, rarity, and average price will be used to calculate APY.
Higher rarity and higher priced NFTs from more valued collections will produce more profits.
NFT Staking Example
Let’s say you hold a cute blue kitty NFT on a fictional platform called LitterBox, and that kitty produces 5 $LIT tokens per day, currently worth $5 on CoinMarketCap. Your kitty NFT is now making $25/day from NFT staking.
Now Let’s say that blue kitty NFT cost you $15,000.
$25 per day for 365 days is $9,125.
Let’s calculate APY now:
Cost of the NFT $15,000 divided by $9,125 yearly yield = almost 61% APY. Not too shabby.
Of course these numbers change based on the value of $LIT tokens. You could be making much more, or much less based on that.
But that’s just one use case example.
Every NFT staking platform can set its own rules and ideas on how things would work when you stake with them, in the same way that staking ETH on the Beacon Chain and staking ADA on the Cardano blockchain, have different rules and staking rewards.
Which brings us to the most important part..
How To Stake NFTs
While we’re only in the infancy stage of NFT Staking, there are some super-interesting and exciting use-cases being built in the crypto metaverse.
In order to start staking NFTs, you need to choose a platform based on your preferences, learn how it works (in almost all cases there’s a great FAQ section), connect your Metamask wallet, and get started.
In most cases, you’ll need some ETH tokens (unless the platform is based on another network, for example, Cardano or Solana) to work the system, exchange to the native currency, and perform actions.
Keep in mind that although there’s a lot of money in this space, and developers are hard at work building and experimenting with all sorts of interesting and exciting technologies..
We still don’t have that amazing use case of an NFT worth $1,000,000 generating insane passive income for its owner.
But with the rate the crypto industry moves, we expect that to change pretty soon. Some projects are already getting pretty close to this.
Once the rest of the NFT industry catches on and big players build their own NFT Staking solutions, we’re going to see an explosion of innovation pour into this space.
But until then, where can you actually stake NFTs right now, if you do want to give it a try?
Best NFT Staking Platforms In 2022
These are some of the most interesting projects where you can generate yield from staking NFTs. Some of these are true pioneers of the industry, being the first to ever attempt to do what they did.
Some of these projects are not direct NFT Staking, but you instead earn tokens which can then be staked.
Only1 – The Social NFT Platform
Imagine “OnlyFans”, but with a decentralized NFT twist. Only1 calls it “SocialFi”.
Creators can create exclusive content on the platform (posts, images, videos), that content is turned into an NFT, and fans can bid on it to become the owners.
Other fans can then unlock the content using the platform’s $LIKE token, and the NFT owner + the original creator both get paid in $LIKE tokens. $LIKE tokens can then be staked on the platform.
WhenStaking – In-Game NFT Staking from Onessus
WhenStaking is Onessus’ super-anticipated platform for Staking NFTs. It allows its users to stake different in-game NFTs, and the platform’s native token $VOID. The platform is still not open to the entire metaverse in and only allows for Onessus blockchain staking, but attractive APYs of over 80% can be pretty enticing if you are willing to go for a longer lock-up period with a rare NFT.
KIRA Network – Fractionalized NFT Staking
Kira is one of the most innovative companies in the space, allowing to fractionalize NFTs into fungible tokens representing parts of an NFT, which can then be used for lending and trading. On the staking side, users can deposit NFTs to farm the native $KEX tokens, which can be staked. KIRA is currently in testnet phase.
NFTX – Community-Driven NFT Staking
NFTX is a platform for creating liquid markets for illiquid NFTs. Or in other words – you can profit from your NFTs! Users deposit their NFT into an NFTX vault and mint a fungible ERC20 token (vToken) that represents a claim on a random asset from within the vault. vTokens can also be used to redeem a specific NFT from a vault.
CyberKongz – Get Some $BANANA
In perhaps the first real case of NFT utility in the Metaverse. At one point, owners of Genesis (first 1,000) CyberKongz NFT were being rewarded with 10 $BANANA tokens a day – worth more than $900 – by simply holding one.
ZooKeeper – Gamification Of Yield Farming & NFT Staking
Participate in the adventure of the first project to give NFTs. Includes dual-farming and rewards for staking your NFTs. It even has boosting options to add some more fun to the experience.
Mutant Cats – These Cats Attract Profits
Mutant Cats is the first DAO that purchases and fractionalizes Cool Cats, CryptoPunks and more valuable blue chip NFTs to be distributed to its members. The $FISH token represents fractional shares of Cool Cats held in the vault. Each Mutant Cat NFT earns 10 FISH per day from staking.
MOBOX – The “GameFi” Platform
MOBOX is a community-driven platform empowering users by rewarding them for “having fun”. NFT stakers earn the $MBOX token as a reward.
SplinterLands – NFT Gaming Pioneers
Splinterlands distributes $SPS tokens on a daily basis through their platform. They distribute these tokens based on the weight of user NFT holdings. These tokens can then be stake for profits.
Final Thoughts: Should You Stake Your NFTs?
The Metaverse is growing at light speed, and with it the NFT space. There are projects worth hundreds of millions of dollars in total value, with some individual NFTs worth millions of dollars each.
There’s definitely a huge market.
It is only fitting then that there will be a way for NFT holders to generate profits and yield on their NFT assets with staking.
Based on your platform of choice, staking your NFT is a great way to generate APY, get more NFTs as a reward. You can also make your NFTs liquid by receiving tokens in exchange for staking them.
Of course, as it always is with crypto, there are platform-related risks and value-associated risks, so be mindful of your staking decisions.