What is NFT Staking? Advantages and disadvantages of NFT Staking.

What is NFT Staking?

Unlocks non-fungible tokens on a platform or protocol in exchange for stake rewards and other benefits is called NFT staking. Staking NFTs enable owners to continue to maintain ownership while generating income from their collection.

Staking is the process of “locking” tokens into an online wallet to support one blockchain the network’s security and operations in exchange for rewards. Proof of stake (PoS) mechanisms are typically used for this by platforms that support staking.

NFT staking gives collectors a new way to monetize their NFT holdings. In the crypto world, it has evolved into the new passive income model. The goal of HODLers staking non-fungible tokens is to receive rewards without having to sell or relinquish ownership of their collection by locking up assets decentralized finance (Defi) platforms.

How NFT Staking works

Staking of non-fungible tokens works somewhat similar to staking cryptocurrencies. It is impossible to stake any non-fungible tokens. Due to the fact that they are tokenized assets, they can be distributed via smart contracts on the appropriate blockchain platform for staking.

As previously mentioned, you need one cryptocurrency wallet which is compatible with the target token to deposit non-fungible tokens. The desired asset must then be added to your staking pool by linking the wallet to the selected NFT staking stage.

It is now just a matter of waiting for your stake rewards, which vary depending on the type of betting platforms, the length of the stake and the annual percentage return. In addition, the Proof of Stake consensus mechanism is used at stake to reward participants.

The interest rates that encourage NFT holders to deposit assets for as long as possible will vary depending on the staking platform. Although some services may have high interest rates, please consider the risks involved. If the interest rates seem too good to be true, the stage may not be reliable. Before staking your NFT on a staking protocol, always do your own research and make sure you are aware of the risks involved.

Also read: Explain the NFT Whitelist. How do you join an NFT whitelist?

NFT Staking Rewards

The stage used and the type of NFT staked determine the type of reward NFT holders can receive for staking their collection. The vast majority of sites that allow users to bet NFTs reward users on a daily or weekly basis. Typically, stake rewards are paid out using a platform’s native utility token. But which is often listed on exchanges for other tokens.

ONE decentralized autonomous organization (DAO) is a feature of some staking platforms that allows NFT holders to unlock their assets in the DAO pool to participate in platform governance and cast votes for upcoming proposals.

The majority of betting opportunities are on game stages such as Axie Infinity, The sandbox, Polychain Monsters and Splinterlands. However, in-game NFTs account for the majority of the NFT market. In the following section, we will discuss some of the best platforms for NFT betting.

What are different NFT Staking platforms?

Recently, many new platforms have emerged that allow users to bet NFTs. To get started, all you need to do is stake your NFTs in a compatible wallet. Some of the best NFT betting platforms are listed below.

• NFTX
• Splinterlands
• BAND NFTs
• Polychain demonstration
• Doge’s capital
• Onesus

What are the pros and cons of staking my NFTs?

When deciding whether or not to stake your non-fungible tokens, consider the following factors.

Advantages of NFT staking

Get involved in projects

Although each project will have its own unique rewards and benefits for staking a non-fungible token, most projects will reward users who stake their non-fungible tokens with utility tokens. Additional benefits of these tokens may include voting and governance rights to determine the project’s future course.

Leverage your unused digital assets

Staking creates a wonderful opportunity for you to idle your digital assets if you have been holding onto a non-fungible token for a while and have no immediate plans to sell it. Without giving up ownership, you can lock your non-fungible token on a staking stage and profit from it.

Also read: What is physical NFT? and how to sell physical items as NFTs

Disadvantages of NFT staking

Price sensitivity

Due to changes in the market, your non-fungible token value may increase or decrease significantly. You may not be able to withdraw an NFT that has a long lock-in period, depending on the conditions at your stake stage. But if holding for the long term has always been your goal, short market peaks and troughs should cause less anxiety.

Possibility of fraud

While receiving rewards for your non-fungible token may sound very enticing, remember that there are risks involved. Since the non-fungible token market is still developing, it can be challenging to tell who to trust and who to avoid. It is not impossible for an unscrupulous betting stage to steal user money and abscond with their tokens.

Is NFT betting a smart investment?

NFT staking is still a relatively new idea. Liquidity is a major issue for NFTs. However, it is clearly a given that the ecosystem is weak. Most NFTs are also bought with the intention of holding them for the long term. However, the hype around NFTs has piqued the interest of investors who are just getting into the digital market and want to explore and perhaps earn rewards in the NFT scene.

NFT betting may not yet be as well known as cryptocurrency betting. However, it has a lot of room to grow in the coming years. Especially if Eth2 succeeds in switching to a PoS mechanism where staking will take the place of mining. The issuance of non-fungible tokens already has a solid foundation that has led to achievements. The fact that you don’t have to sell your non-fungible token collection is arguably the biggest advantage of stealing non-fungible tokens.

Conclusion

Participants can increase the rewards they receive from their inactive digital collectibles by appealing in non-fungible token stakes. However, if the NFT project has a DAO, non-fungible token holders can stake their digital assets into the pool. With the use of non-fungible token stakes, this asset class now has new applications beyond simple fundraising. In the coming years, new investment opportunities will probably be created in the near future in the non-fungible token space.

Also read: NFT Assets: How to store NFT assets online and offline