Cryptocurrency staking has become one of the many ways investors earn passive income on their holdings. It is one of the few ways to help investors continuously earn investment returns. However, many do not know that investors can also stake their non-fungible tokens (NFT) to earn passive income. The development has made non-fungible assets all the more attractive.
What is NFT staking?
By staking an NFT, users can earn rewards by putting the asset to work on a blockchain. To do so, investors and collectors can attach their non-fungible tokens to a platform or protocol. This action will earn staking rewards for the staker.
Staking an NFT is comparable to staking on decentralized finance (DeFi) yield farming. In yield farming, crypto is lent or deployed to liquidity providers. Cryptocurrency stakers gain rewards through interest or the charges suffered by others during transactions.
Because a non-fungible token is a tokenized asset, staking them operates similarly to staking cryptocurrencies. Moreover, staking is not possible on all non-fungible tokens.
In order to stake a non-fungible token, users will need a wallet that is compatible with the non-fungible in question. The next step is to connect the wallet to the staking platform, so that the investor may send their non-fungible token.
The majority of NFT staking platforms provide periodic incentives. These rewards usually go out daily or on a weekly. The utility token of the platform is frequently used to pay out these prizes, although there are certain exceptions. You can exchange the staking reward tokens and possibly convert them into other cryptocurrencies or fiat money, regardless of the token used for staking rewards.
Popular staking platforms
There are several platforms that offer non-fungible staking services. Some of the popular ones are Binance NFT PowerStation and MOBOX (MBOX). For using Binance’s platform, stakers receive Binance Fan Tokens in return. The token can be used by stakers for various advantages in the Binance ecosystem. Stakers can receive preferential treatment when purchasing tickets or participating in significant club decisions as token holders. Sports clubs are the main users of Binance Fan Tokens, however, celebrities with significant fan bases like artists may also utilize them.
There are also staking platforms with autonomous decentralized groups (DAOs). Here, NFT owners can secure their assets in a DAO pool, sometimes referred to as an NFT staking pool. This enables them to take part in platform governance duties.