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NFT staking lets holders generate passive income by locking their assets in a DeFi platform.
Staking allows you to generate passive income from your NFTs while maintaining ownership.
The rewards are typically in the form of a native token associated with the blockchain platform on which the NFTs are traded.
NFTX, ApeStake.io, Axie Infinity, MOBOX, and Zookeeper are some platforms where you can stake your NFTs for rewards.
Most non-fungible tokens (NFTs) investors often trade to make profits. Trading involves minting NFTs during release or purchasing at low prices and waiting for them to appreciate to make profits. But what if your collections fail to appreciate? Then your funds will be “idle” instead of generating rewards elsewhere.
However, a new strategy is to generate yield by staking NFTs. Staking allows you to deposit your NFTs on decentralized finance (DeFi) protocols and earn rewards without selling your assets. It also offers NFT holders a way to overcome the illiquidity of NFTs. This article will cover what NFT staking is and how it works. We will also look at how to earn rewards with NFT staking and the top NFT staking projects.
What is NFT Staking?
NFT staking involves locking up your NFT assets on a DeFi protocol in exchange for staking rewards and other benefits. Staking allows you to generate yield from your NFTs while maintaining ownership. It’s like staking cryptocurrencies, where you hold onto your coins and earn rewards for doing so.
When you stake your NFTs, you commit them as collateral to earn rewards. The rewards are typically in the form of a native token associated with the staking platform, or you could also earn tokens that are part of the NFT’s ecosystem, like how staking BAYC earns you ApeCoin.
To participate in NFT staking, you first need to own an NFT eligible for staking. Not all NFTs qualify for staking, so you’ll need to check with the specific project to see if they support your asset. Once you have an eligible NFT, you can stake it by holding it in a platform that allows staking.
One thing to remember is that staking your NFTs may involve locking them up for a specific time. This means you won’t be able to sell or transfer them during that time. The length of the lock-up period will vary depending on the project, so be sure to check with the specific project to see how long your NFTs will be locked up.
There are multiple reasons why you might choose to stake your NFTs. One reason is to earn crypto. By staking your NFTs, you can earn rewards without doing much work. Another reason is to show support for a particular project or community, as by staking your NFTs, you’re showing that you believe in the project and want to help it grow.
Staking NFTs is not without its risks, however. The major one is that the value of the NFTs you are staking could go down during the lock-up period. If this happens, you could end up losing money. Another risk is that the platform you are staking your NFTs on could become compromised or experience technical issues. In this case, your NFTs and the rewards you have earned could be lost, especially if you are using staking services provided by a centralized crypto exchange.
Factors to Consider when Staking NFTs
Below are the factors to consider when staking NFTs:
Does Your NFT Qualify for Staking?
As mentioned, not all NFTs can be staked. Therefore, if you’re planning to stake your NFT, ensure your NFT qualifies for staking before purchasing.
Most NFT staking protocols impose lock-up periods, while some don’t. The lock-up period varies from days to years, and you can’t use your assets, so select a period that you are comfortable with.
Annual Percentage Yield (APY)
APY is the yearly expected return on a staked NFT. Some staking platforms promise high APY, but you should Do Your Own Research (DYOR) to determine their sustainability. Each platform leverages its own method of calculating APY. While the rarity and value of the NFT can affect its APY, there are also platforms that may return a random NFT from the same collection to you when you unstake your NFT.
Some NFT staking platforms only offer staking rewards, while others go the extra mile to provide extra benefits. For example, some protocols issue rewards in their native tokens, which may include governance rights through the protocol’s DAO.
Lastly, NFTs are denominated in crypto, and the staking rewards are digital assets. As such, crypto volatility can significantly influence your NFTs and the rewards you generate.
How Does NFT Staking Work?
Staking NFTs shares some similarities with depositing money in a bank saving account. Your funds are held for a given period, and they earn interest. While NFT staking doesn’t work exactly like that, the primary concept is the same. When you stake your NFTs, you lock them up in a smart contract and commit them as collateral, which allows you to start earning rewards for the duration of the staking period.
The process of staking NFTs typically involves a few steps. First, you will need to find an NFT staking platform that supports your NFT. Once you have found an NFT staking platform, you need to connect your web3 wallet, like MetaMask or Trust Wallet, to the protocol. This will allow you to transfer your NFTs from your wallet to the platform.
Next, you will need to choose the NFTs you want to stake. Different platforms may have different requirements for which NFTs can be staked, so check the platform’s rules before staking your NFTs. Once you have chosen your NFTs, you need to transfer them to the platform and specify how long you want to stake them.
After you have staked your NFTs, you will begin to earn rewards. The number of rewards you make will depend on the value of your NFTs and the length of time that you stake them. You can typically withdraw your rewards at any time, but you will have to wait until the end of your staking period to withdraw your NFTs.
Earning Rewards with NFT Staking
The type of rewards you will earn from staking NFTs depends on the protocol you are using and the terms of the staking arrangement. Most NFT staking protocols provide daily or weekly rewards. Staking your NFTs may allow you to earn a portion of the platform’s transaction fees, or entitle you to other platform-specific rewards. Some platforms may also offer bonuses or other incentives for staking NFTs for a certain period.
Depending on your agenda and your personal preferences, there are different staking options. For someone who is looking for exposure to NFTs as an asset class but is not a collector, NFTX might be a good fit. For BAYC collectors, staking their NFTs could offer them a way to put their NFTs to work instead of lying idle in a wallet. Since in-game NFTs form a big percentage of the NFT market, you’ll also find NFT staking opportunities on play-to-earn (P2E) platforms like Axie Infinity and MOBOX.
NFT Staking Projects
If you’re looking to start earning by staking NFTs, or by staking NFT-related tokens, here are some projects to consider:
NFTX: Unlock Liquidity by Staking NFTs
NFTX is a liquidity platform that enables NFT investors to purchase, sell, stake, and swap NFTs under one roof. Its primary appeal is a blend of traditional NFT staking that exposes you to blue chip NFTs, such as CryptoPunks and Cool Cats, through fractional ownership. In other words, you can become an NFT investor without actually holding an NFT.
As a staker, you will earn a share of the inventory rewards, while maintaining your claim on the underlying staked inventory. Do note though, that while you maintain your claim to the staked inventory, you are giving up ownership of your specific NFT so anyone can buy or redeem it from the vault. For example, if you stake CryptoPunk 3082 with NFTX, you’ll receive a PUNK token from NFTX, which represents ownership of one random NFT from the vault, so you could end up with CryptoPunk 2787 when you withdraw it as an NFT.
Axie Infinity: Earn AXS by Staking Land
Axie Infinity launched its Land Staking campaign in July 2022. It has five land NFTs for staking: Savannah, Forest, Arctic, Mystic, and Genesis, with rates starting from 1.275 ETH. Axie Infinity players began purchasing land NFTs as early as 2019 once they were available, and the launch of Land Staking enabled players to start earning AXS, although the rates differ based on the rarity level of the staked land.
Do note though, that with the launch of Axie Homeland and land-related gameplay, it’s possible that Land Staking rewards may transition to requiring active gameplay once it starts supporting token rewards.
Stake BAYC, MAYC and BAKC to Earn APE
If you’re holding Bored Ape Yacht Club (BAYC), Mutant Ape Yacht Club (MAYC), or Bored Ape Kennel Club (BAKC), you can stake your NFTs to earn APE on ApeStake.io. Owning these NFTs will grant you access to exclusive staking pool, each with a different reward for their members, with the BAYC pool offering a maximum of up to 10,094 APE for each BAYC. However, if you own BAKC, you’ll need to pair it with a Bored Ape or a Mutant to earn staking rewards. You can also stake APE to earn APE.
If you sell your NFT while it is committed to a staking pool, you will lose your staked APE. The new owner will receive your staked APE and rewards.
You can also stake your Bored Apes and Mutant Apes through Binance NFTs, although you will have to deposit them into your Binance account in order to stake them through Binance. Likewise, rewards will be paid into your Binance wallet.
MOBOX (MBOX): Staking MOMOs to Farm MBOX Tokens
MOBOX is a P2E gaming platform that integrates DeFi yield farming with NFTs that runs on the BNB Smart Chain. MOBOX has a metaverse known as MOMOverse and MOMOs NFTs, where MOMOs display distinct quality and hash powers. Besides opening Mystery BOXes to collect MOMOs, users can also buy them from the MOBOX marketplace.
Based on the total hash power of all your MOMOs, you’ll be able to “mine” MBOX tokens. These MBOX tokens can be staked to receive an equivalent in veMBOX, which can increase your weight in the pool by up to 3X and also enable you to participate in other MOMO farm events.
On MOBOX, staking your MOMOs doesn’t affect the use of MOMOs in game.
Zookeeper: ZooBoosters NFTs to Improve ZOO Rewards
Zookeeper is a DeFi yield farming platform. It leverages liquidity pools with different mascots to offer NFT staking. Each pool supports dual farming; hence, you can earn ZOO tokens and WanSwap Liquidity Provider (WASP) rewards. You can boost your rewards by locking your rewards for up to six months.
Zookeeper also includes the ZooBooster NFTs, which add a percentage boost and lets you reduce your lock-up period. By combining these NFTs, users can create new, higher level NFTs, which will improve the stats, leading to a higher percentage boost and lower lock-up period. ZooBooster NFTs can be switched out for another at any point during staking, and they can also be sold in the Market for ZOO tokens.
NFT staking can range from staking NFTs to unlock liquidity, as in the case of NFTX, or more commonly, to offer users a way of generating yield by putting their unused NFTs to work. In other cases, it’s a way to add an extra dimension to the usual gamefi or DeFi protocol, where users can increase their yield by staking different NFTs. Staking has unlocked new applications for NFTs that weren’t previously available, providing them with utility beyond uniqueness. Though NFT staking is still new and risky, we are more likely to see more staking opportunities in the future.
All information in this article is provided for informational purposes only and should not be taken as investment advice or promotion of the protocols featured.