What Is Staking In NFT: Introduction to NFT Staking
NFTs have become a great area for investments. Authors of non-fungible token collections are constantly discovering new use cases for these assets. As an example of such newer uses, there is NFT staking, where NFTs act as utilities. These days it is possible to stake your NFT if you play metaverse games and want to achieve a character’s or game unit’s boost. In fact, staking nowadays is a part of P2E gaming.
Staking became known to publicity as a method of earning in a passive way. The concept itself isn’t brand new, but, as for the world of blockchain assets, it needs some clarification. In simple terms, if you hold an NFT, you can lock it on one of the DecentralizedFinance platforms for a defined period of time to receive financial rewards. This works the same as getting interest in a conventional bank.
Key pluses of NFT staking include:
- Getting rewards in tokens that can be either converted to fiat currency or other cryptocurrencies
- High potential for returns in the future
- Being able to have a voice in governance tasks on staking platforms (especially if you stake in pools), plus making proposals there
Among possible risks, there is a chance that the rewarded NFT will end up dropping in price significantly because of its high volatility. Yet, this risk exists anyway.
The method got popular mostly for its simple mechanisms of action and no need to monitor the market, unlike with buying and reselling crypto coins.
What Does Staking an NFT Mean: Simple Definition
But what is staking in NFT sphere? It can be explained as locking your digital asset on platforms or protocols, which allows you to get perks – money and other staking privileges.
The whole process relies on the mechanism called Proof of Stake (PoS) used for rewarding those who take it up. This method is profitable based on the decreased total supply of tokens that comes as a result. The staked NFT, at the same time, brings money to its owner and belongs to the user, and exists in a collection.
How Does Staking an NFT Work Compared to Yield Farming
Now, the two methods are often placed near each other because of their similarities. Just like yield farming utilizing smart contracts, NFT staking works on PoS protocols. In the same way, they provide income from fees.
So, both staking NFTs and yield farming are profitable, thanks to locking assets on the blockchain. However, we noticed that staking NFTs is a much more beginner-friendly way to get rewards than yield farming.
To cut it short, it is less risky and requires less knowledge from a user. Just depositing an NFT will be enough for passive income to start arriving. In addition, staking NFTs is a win-win because rewards can be either fungible tokens (such as crypto coins) or other NFTs. The latter can be used for further staking or reselling.
How to Stake NFT and Is It Possible for All NFTs?
So, how does staking an NFT work, and what are the user’s responsibilities? What is staking an NFT? This method is often paralleled to staking crypto coins. In order to stake a token, one needs to have a crypto wallet fitting for the type of NFT they aim to stake. The user must also check if the blockchain where this NFT is located is compatible with the wallet.
Lastly, a participant needs to link their crypto wallet to the platform for staking. This will be a final point to make sure the NFT staking will work well.
Putting your non-fungible token to work on the blockchain is, however, limited. In every NFT project, the possibilities are different, so it is recommended to check it before purchasing. What is more, it plays a role in what smart contracts are suitable for your NFT.
Next, what is staking in NFT, and where can I stake my NFT? Today different platforms offer opportunities to stake non-fungible tokens: these are both specific staking platforms and crypto games and places we are used to using as marketplaces:
- The Sandbox.
Still, many of such places put their requirements, for example:
- Owning a specific value of NFTs to be able to stake one
- Staking NFTs on condition you join a staking pool
- Letting the token stake for a defined period of time before the reward can be withdrawn
We hope you’ve received the answer to ‘What does staking an NFT mean?’ and ‘How to stake NFT?’ at least at a level that allows you to realize how it happens and if it is what you need right now.
How to Stake an NFT In a Few Easy Steps
As we mentioned previously, staking procedures vary from project to project, and often, you can do it, for instance, right in the metaverse game.
However, here we will take the community WhenStaking as an example to show you how to stake NFT and answer the burning question of many ‘How does NFT staking work?’ This platform works for most blockchain games, and lets players stake any game NFT.
The main utility token on the platform is VOID. This coin is used both to pay for transactions and to stake itself. The WhenStaking platform is easily connected to the WAX Cloud wallet. After connecting, follow the platform’s instructions to stake an NFT of your choice. These days, the tool works only with the Onessus blockchain, but as the blockchains develop and evolve, there might appear more options.
We hope it got clearer about what is staking in NFT and what does staking mean in NFT communities. Feel free to use this way of passive income and enjoy its fruit.