What Is NFT Staking and How Does It Work?
As part of the cryptoworld, NFT stakes are a new way of earning passive income through the process of staking. Holders of NFT in DeFi platforms are able to receive rewards when their assets are locked in the platform. In this way, they are not forced to sell their NFT collections.
NFT stakes are based on a Proof of Stake (PoS) mechanism similar to those used by DeFi yield farming in order to reward participants. If the users lock up NFTs, they will receive rewards based on the annual percentage yield (APY) and the amount of NFTs staking. NFT staking can have a positive impact on individual investors as it tends to affect the overall supply, as it tends to be lower. The use of NFT staking, however, will broaden the scope of used cases for NFTs which go beyond the notion of collecting digital art.
Introduction
It's assumed that NFTs should be viewed as digital representations of artworks and collectibles that might eventually grow in value as time goes on, especially if they are non-fungible. Several NFT projects share a portion of their revenue with the community of NFT holders by sharing their revenue. These revenues come primarily from secondary market sales and royalties received from NFT holders.
Despite this growth, as NFTs become more and more popular, developers, artists, and collectors are beginning to explore new ways to use their NFT collections. A recent application for NFTs can be found in staking platforms that use them as utility tokens. There are some gaming metaverses, for instance, where collectors of NFTs can stake their tokens in order to gain access to the character's ability boosts and earn additional rewards.
What is NFT staking and how does it work?
Staking NFTs as suggested by its name, is the act of locking up these tokens (NFTs) to a system or protocol in order to obtain rewards for staking as well as other privileges. By doing this, holders of NFTs are able to earn a passive income while keeping their ownership rights.
In contrast to other DeFi yield farming concepts, NFT staking is still in its infancy compared to other types of staking. However, they work in a similar way. When you store your NFTs on a platform, you will be eligible to receive rewards based on the annual percentage yield (APY), the duration of your staking, and the number of NFTs you have locked up.
As a result of the unique nature of NFTs, it is a common practice among investors and collectors to hold and speculate with them. With the advent of the NFT staking protocol, this opens up a new opportunity for them to monetize their assets, which could potentially drive up the demand for stakable NFTs in the market as more people become interested.
You stake your NFT account just like you stake your bitcoin (BTC) account or ether account (ETH). In order to stake an NFT, you need a cryptocurrency wallet that supports NFTs. It should be noted, however, that not every NFT can be staked to obtain rewards. In order to acquire the NFTs for different projects, it's a good idea to check on your preferred projects before you purchase them.
Where can I stake NFTs?
In December 2021, play-to-earn games are most likely to provide the majority of NFT staking opportunities. Two of these games are MOBOX and Zookeeper. A few projects are developing NFT staking functionality on their platform as well.
MOBOX (MBOX)
The MOBOX game-to-earn metaverse, which combines DeFi yield farming with NFTs, allows players to earn money by playing. The service provides players with the opportunity to stake NFTs for a chance to earn rewards in its native crypto, MBOX. MOBOX's metaverse is commonly referred to as MOMOverse, and NFTs can be called MOMOs.
The NFT marketplace has a variety of methods for minting, earning, or buying MOMOs. Depending on its properties and hash power, each MOMO will be different. Through staking unique MOMOs, you can farm the MBOX governance token by staking them. Whenever you collect more MOMOs and earn more MBOX rewards, you can get a larger collection of daily MBOX rewards.
Moreover, these MOMO NFTs can also be used across other MOBOX partner platforms. As a result, the NFTs generated by partnering projects can be utilized by MOBOX as well. The same NFTs you have staked in the PancakeSwap Profile can be used on MOMOverse without the need to unstake them from PancakeSwap. Through this, you will be able to participate in team battles and earn CAKE staking rewards on PancakeSwap, while also making use of them for MBOX rewards on MOBOX games.
Zookeeper (ZOO)
The Zookeeper DApp is gamified yield farming. In addition to NFT staking, it offers many liquidity pools with different mascots. The Zookeeper liquidity pools allow for dual farming, which means that in the event of a successful transaction, you are rewarded with both the utility token ZOO as well as the WanSwap Liquidity Provider (WASP) token.
In order to maximize your APY rewards, you can opt to lock your tokens for up to 180 days in order to increase your APY rewards. To maximize your rewards and reduce the amount of time associated with your WSLP, you can also stake NFTs called ZooBoosters. The ZooBoosters are NFT cards that can be obtained by staking ZOO tokens or by purchasing gold chests in the DApp.