Now many crypto enthusiasts are trying to make money by creating, selling, and reselling NFTs. It is worth noting that this is quite successful. Nevertheless, some people after acquiring the first NFT have a fear of not getting a return on invested monetary resources, and it is quite reasonable. That is why the question of how to earn passive income with NFTs arises more and more often. Such a request is justified by a sudden decrease in the minimum value of tokens, which of course does not please any holder of NFT.
Nevertheless, even such fears will not be enough to cross out all the benefits of owning digital art. NFT offers countless opportunities for investors, and there’s much more here than you might think. If you are new to this area and thought that you can make a profit only from selling tokens, you are very mistaken.
Opportunities to generate passive income from owning NFTs are used by their creators, art fans, and investors. Next, we’ll talk about ways that you can successfully apply to make a good profit. Let’s start with the basics so that beginning crypto enthusiasts and NFT creators can get the hang of this topic faster.
NFT: how does it work?
Before we move on to ways to earn passive income, let’s talk about how NFTs work and in what format they exist (of course, in this case, it’s blockchain). To put it very simply, a blockchain is a database that is stored simultaneously on a huge number of devices.
But tokens can be seen as more than just part of a collection or something valuable in terms of an emotional experience, nostalgia, or a chance to brag about a unique acquisition. The resealability of tokens inherent in their smart contracts also allows them to be viewed as investments with the potential to generate passive income, which we’ll talk to you about further on.
More about earning passive income
This is what they say about income that you can get without doing anything at all on platforms. In the same way, you can earn money from NFT without actively working with platforms. All the work necessary for this is done in advance. As a result, the system works as efficiently as possible and you practically do not need to maintain it. You simply earn passive income, without even reselling the NFT on the platforms.
Sometimes getting a benefit from tokens will be as easy as receiving dividends from your investments. Now we will tell you how your activities can easily lead to earning passive income just by owning an NFT. All of the tips below can also use by NFT creators.
Generating NFT passive income: stacking and royalty
Stacking NFTs is similar to locking or depositing your crypto to earn fees while retaining ownership of your assets. Unlike crypto, not every NFT can be staked. In this case, passive income usually takes the form of tokens that can be exchanged, NFTs that can be placed on a platform, or access to voting rights in a DAO.
While you can stake NFTs that you already have, some platforms insist that people use NFTs built into their platforms to stake. Depending on the industry you’re interested in, there are several ways to generate this feature. NFT staking is usually done on meta-universe or gaming sites.
Most NFT staking platforms offer rewards every week or day. Once you’ve determined which option you want to use for tokens, you need an NFT-compatible crypto wallet, which you connect to the platform of your choice. Here is a list of the most popular options on the market:
- Doge Capital offers a staking option in which investors can bid on NFTs in their collection of pixel patterns and earn daily profits in the platform’s own utility token.
- Polychain Monsters can be purchased as digital booster packs. Their owners can stake them and receive weekly rewards in the form of their own crypto.
- You can buy some tokens and put them in royalty pools to get a share of the earnings.
For example, NFT art artists have earned about $1.1 billion in royalties from collection sales, NFT-marketplace OpenSea reported on its official website.
Also according to calculations by investment firm Galaxy Digital, Yuga Labs was able to earn more than $147 million on royalties from the resale of BAYC.
The amount of profit you can get from stacking NFTs depends on factors such as the annual percentage yield, the type and number of NFTs, and the duration of the operation.
More about royalty
As you already know NFT can be in the form of intellectual property (code, music, videos, podcasts, movies, and other variations). Just as you can earn royalties when your creativity is published in real life, you can earn passive income from tokens, that is, in real cryptocurrencies, on your NFTs when sold on the secondary market.
When you create an NFT, you can determine the royalty rate you want to receive for subsequent actual royalties on that particular token or collection. This is a great solution for NFT creators. Royalty payments are designed to last indefinitely even after the token is no longer in your possession.
Earning passive income with NFT: other ways
Here we list other ways that are successfully used by a large number of users.
Rent (reNFT)
Some opportunities regarding profits are exclusive to NFT owners. Many people would like to take advantage of NFT-related opportunities and services, but feel that the cost of tokens is excessive and unreasonable. Renting solves this problem. NFT owners and creators can rent out their tokens. There are special platforms with loan or credit features for such purposes. This way, once the lease process is initiated, the NFT is put into a smart contract.
Renting out an NFT is the transfer of ownership of your NFT to someone else at a reduced price from the actual purchase value. The temporary owner will then enjoy the benefits of owning a particular NFT. Currently, there are two ways to rent an NFT: with and without collateral:
- In a rental with collateral, the tenant will pay a deposit at a higher price than the NFT. Collateral is a step to protect the interest of the NFT owner.
- In a no-collateral rental, the tenant will never receive the original NFT. A no-collateral lease minimizes the financial risk for both parties. No collateral is required, and the owner of the NFT will never have to part with his or her asset.
Subsequently, the terms of the smart contract will be determined by both parties. Once the terms are set and agreed upon, the tenant will pay a certain amount as rent and the rental process will begin.
Lending (NETfi)
The difference with the previous point here is that the owner or creator of the token exchanges his NFT as collateral for a loan or credits, to earn interest. Such a loan must have been repaid at an agreed-upon time with a predetermined amount, otherwise, ownership of the NFT will be lost to the lender.
Such tokens are stable and considered excellent long-term investments. Their owners are reluctant to sell them and are always considered reliable borrowers. As a lender, you will be charged a portion of the interest earned on a successful lending transaction.
Share utility (IMPT)
Some NFTs give holders access to a percentage of the income generated from offline financial investments with the profits from the initial launch sale. It’s like being a shareholder in a company. There’s also the option of fractional token ownership, which is the joint ownership of a particular NFT. In other words, that percentage of income acts as shares in companies serving the NFT field.
Investing in NFT-startups (Nneed to look for a hidden gem)
This method can rather be called an indirect way of making money from NFT, but still. New projects which use the NFT concept are now regularly launched. These are applications in a wide variety of industries, from games to data storage. Investments in the most promising projects can pay off repeatedly in the future. In addition, the exchanges conduct a thorough analysis of each startup, as they value their reputation. But you have to do your own research, too, to invest wisely.
The best options for generating passive income from NFTs
There is, of course, no single answer as to which of the above methods is best for you. It all depends on the kind of NFT you own. However, of all the options, stacking, leasing, lending, and receiving royalties are the most common. It is worth mentioning that the ability to earn a passive income consistently and in large amounts also depends on the market structure. The same rules apply here as in conventional investment opportunities.