What Is NFT Staking and How Does It Work?

13/02/2022 By Author

[ad_1]

Disclaimer: This article is for educational purposes only. Binance has no relationship to these projects, and there is no endorsement for these projects. The information provided through Binance does not constitute advice or recommendation of investment or trading. Binance does not take responsibility for any of your investment decisions. Please seek professional advice before taking financial risks.

TL;DR

NFT staking is a new way to earn passive income in the crypto world. It lets NFT holders lock their assets in DeFi platforms to receive rewards. All without the need to sell their NFT collections.

Similar to DeFi yield farming, NFT staking relies on a Proof of Stake (PoS) mechanism to reward participants. By locking up NFTs, users can receive rewards based on the annual percentage yield (APY) and the number of NFTs staked.

At the individual level, NFT staking can benefit investors, as the overall supply tends to be lower. But in a broader context, NFT staking brings new use cases to NFTs that go beyond the idea of collecting digital art.

When we talk about non-fungible tokens (NFTs), most people think of them as digital representations of art pieces and collectibles that could potentially grow in value over time. Some NFT projects share part of the revenues they get with the community of NFT holders. These usually come from secondary market sales and royalties.

But as the NFT market grows, developers, artists, and collectors are exploring new use cases for their NFT collections. One of the latest use cases is using NFTs as utility tokens in staking platforms. For example, in some gaming metaverses, NFT collectors can stake their NFTs to boost their game character’s abilities and earn extra rewards.

As the name suggests, NFT staking refers to the locking up of NFTs on a platform or protocol to receive staking rewards and other privileges. This allows NFT holders to earn a passive income while still maintaining ownership of their NFTs.

While NFT staking is still in its infancy compared to other DeFi yield farming concepts, they work in a similar way. By locking up NFTs on a platform, you can receive rewards depending on the annual percentage yield (APY), the staking duration, and the number of NFTs staked.

Due to the unique nature of NFTs, investors and collectors generally prefer to HODL and speculate. NFT staking opens up a new opportunity for them to monetize their assets, which could potentially attract more people to participate and drive up the market demand for stakable NFTs.

Staking an NFT is just like staking your bitcoin (BTC) or ether (ETH). All you need is a cryptocurrency wallet with NFTs. However, not every NFT can be staked to earn rewards. The requirements vary from different projects, so it’s better to check on your preferred projects before acquiring the NFTs.

As of December 2021, most NFT staking opportunities come from play-to-earn games. MOBOX and Zookeeper are two examples. Some projects are also developing NFT staking ability on their platforms, such as Binance Fan Token Platform and Doge Capital.

MOBOX is a play-to-earn gaming metaverse that combines DeFi yield farming with NFTs. Built on the Binance Smart Chain, it allows players to stake NFTs to earn rewards in its native cryptocurrency, MBOX.

The MOBOX metaverse is called MOMOverse, and the NFTs are called MOMOs. You can mint, earn, or purchase MOMOs from the NFT marketplace. Each MOMO has different qualities and a randomly generated hash power. By staking unique MOMOs, you can farm the governance token MBOX. The more MOMOs you collect, the more MBOX rewards you can get each day.

These MOMO NFTs can also be used across other MOBOX partner platforms, and the NFTs from partnering projects can be used on MOBOX as well. For example, you can use your staked PancakeSwap Profile NFTs on MOMOverse without having to unstake them from PancakeSwap. This lets you enter team battles and earn CAKE staking rewards on PancakeSwap, and at the same time utilize them in MOBOX games to earn MBOX rewards.

Zookeeper is a gamified yield farming DApp. It provides NFT staking in liquidity pools that feature different mascots. All liquidity pools in Zookeeper allow dual farming, meaning that you can earn both the utility token ZOO and the WanSwap Liquidity Provider (WASP) token as rewards.

To increase APY rewards, you can choose to lock your tokens for a certain period, up to 180 days. You can also stake NFTs called ZooBoosters to maximize your rewards and reduce the locking period for your WSLP. ZooBoosters are NFT cards that can be obtained in gold chests purchased in the DApp or by staking ZOO tokens.

Binance is the first crypto exchange to offer an NFT charging service. On the Binance Fan Token Platform, token holders can charge their favorite team’s supported NFTs to earn extra Binance Fan Token rewards. Binance Fan tokens are utility tokens issued by sports clubs.

Binance Fan tokens allow sports fans to access special club perks, such as exclusive discounts on tickets and limited-edition merchandise, voting and decision-making rights to the club’s matters, reserved exclusively for the holders of such tokens.

NFT PowerStation is an innovative gamification feature on the Binance Fan Token Platform. By charging the supported NFTs on the corresponding teams’ NFT PowerStation, fans can power up their fandom and claim extra Binance Fan Token rewards. The longer the NFTs are charged, the higher the fan rewards they can get.

For more information on how to earn rewards by charging NFT on the Binance Fan Token Platform, please check this guide.

NFT staking allows participants to make an extra income from their idle NFT collections. At the same time, NFT staking is creating new use cases for NFTs that were never explored before. It might be too early to tell, but we will probably see new NFT staking opportunities being created. Not only for NFT collectors but also within the Play-to-Earn gaming industry and other areas powered by blockchain technology.

Disclaimer: This article is for educational purposes only. Binance has no relationship to these projects, and there is no endorsement for these projects. The information provided through Binance does not constitute advice or recommendation of investment or trading. Binance does not take responsibility for any of your investment decisions. Please seek professional advice before taking financial risks.

[ad_2]

Source link