Earning money with little to no effort is the goal of passive income. Investments in blockchain-based assets, such as NFTs, can provide a passive income in more ways than one. In this article, we will explain a number of ways to earn passive income with NFTs.
NFTs known as Non-fungible tokens are digital assets that cannot be exchanged for other currencies and are typically developed with the same kind of blockchain-based programming that underpins cryptocurrencies.
In layman’s terms, the technology underlying these cryptographic assets is referred to as the blockchain. They are not able to be traded or exchanged in the same way that other cryptographic assets, like Bitcoin or Ethereum, may be traded.
Due to the fact that it possesses distinctive qualities, the name “NFT” makes it very evident that it cannot be changed or substituted in any way. Both fiat cash and cryptocurrencies are fungible, meaning they may be traded or swapped for one another just like any other kind of currency.
Each NFT is a link between the original owner and a digital or, in some situations, physical asset. In theory, any digital item can be transformed into an NFT. The beauty of NFTs is that anyone can create and sell replicas of viral content such as tweets, Facebook posts, Instagram images, and more.
You may be wondering why, therefore, individuals are willing to spend such absurd sums of money on something as nebulous as NFTs. And you’re probably also wondering, “How do people even get money from NFTs?” because, after all, NFTs are just pictures, right? well, your confusion will be cleared in a bit.
Top 7 ways to earn passive income with NFTs
- Renting NFTs
- Staking NFTs
- NFT Royalties
- NFT Gaming
- Trading NFTs
- NFTs start-ups
- NFT-powered yield farming
Now, we will be getting into the nitty-gritty of how precisely you can earn passive income via the above-listed ways.
Renting NFTs
NFT rental is a new passive income trend. Multiple games let players rent NFTs to enhance their gameplay. These NFTs can include weapons that help players beat formidable foes, equipment that let them scale a mountain or build a house, or cool character skins.
Smart contracts automate this strategy’s transactions. You simply enter the period and amount of your NFT rental, and the blockchain finds you a renter. It’s a terrific passive income for beginners. Gaming experts expect that soon big games will have NFTs, and renting or buying them would be required to properly experience a game.
Many gamers can’t afford NFTs as prices grow. Renting them out might generate a large profit. In this case, both the gamers and you win, since you generate a passive income from your NFT. If your NFT code may only be used in one game, no one may rent it if that game loses popularity. You should buy NFTs with many use cases that are so popular that many developers want to utilize them.
Staking NFTs
The combination of non-fungible tokens (NFTs) and decentralized finance (DeFi) protocols has a number of benefits, one of which is the ability to stake NFTs. Staking refers to the process of depositing digital assets into a DeFi protocol smart contract in order to generate a yield. This can also be thought of as “locking away” digital assets.
You are able to utilize any NFT on some platforms, but in order to obtain staking token incentives on others (which are typically priced in the platform’s native utility token), you are required to purchase native NFTs. This can vary from platform to platform. Here are some examples of platforms that facilitate the staking of NFTs:
- Only1
- NFTX
- Splinterlands
- Kira Network
Some stakeholder benefits are denominated in governance tokens. These protocols allow token holders to affect future ecosystem development. Staking NFTs yields coins that can be reinvested in other yield-generating methods.
Due to the combination of NFTs and DeFi infrastructures, you can now contribute liquidity and earn NFTs in exchange for establishing a position in a specific liquidity pool. Staking is a stable approach to getting money from NFTs.
If you supply liquidity on Uniswap V3, the automated market maker (AMM) will issue an ERC-721 token, also called the LP-NFT token, representing your share in the pool. The NFT is engraved with the token pair, token insignia, and pool’s address.
This NFT can liquidate your liquidity pool stake quickly.
NFT Royalties
Royalties from NFTs are a great way to make passive income. NFT royalties are like those for music, cinema, and art. If someone uses or sells your NFT, they must pay you a percentage. These royalties are integrated into a smart contract, so every time a transaction is done on the blockchain, you’ll get paid.
The most frequent NFT royalty is 2% per sale. 5% to 10% is a frequent royalty. For example, if your NFT sells for $5,000 and you have a 10% royalty, you’ll get $500. When your NFT is sold, you’ll continue to receive royalty payments, which will climb as the asset appreciates.
NFT Gaming
To earn a living in today’s society, all one needs is a computer, a game console, and a little bit of time. NFTs are a digital currency used in blockchain-based games for the acquisition and sale of virtual goods. It’s not a new phenomenon for rare collectibles to fetch exorbitant prices; CryptoKitties, for example, is already a staple of the gaming industry despite their scarcity.
In some situations, the price of a single crypto cat has reached more than $300,000. More and more games utilizing cheaper NFTs have been released recently. In order to attract customers, several businesses are offering incentives to be among the first to sign up. It is possible, with the correct information and the newest game assets, to earn money from NFTs
NFTs Trading
Instead of trying to enter and exit the market as quickly as possible, NFT trading is focused on the accumulation of small but steady profits over the course of a longer period of time. Investors who are interested in trading NFTs will frequently buy and sell one of them for a small profit, and then they will buy and sell another NFT for another small profit.
In the end, this process demands significantly more patience and knowledge of the market because it depends on obtaining NFTs at prices that are below their true value and then selling them at the optimal time. However, this strategy might result in exponential financial gains over the course of a longer period of time, which is one of the reasons why experienced investors favor using this approach.
NFTs Start-ups
Investing in NFT-focused firms is a fantastic way to make money from NFTs. An indirect method of making money with these assets is by investing in firms that use them. Non-Fungible-Tokens have proven that they are here to stay, unlike many other cryptographic tokens that came and went. They can be used in a wide variety of fields and could radically alter many aspects of society.
Numerous NFTs firms in the crypto sector show great promise and have made significant progress. It would be awesome if you could back them as they take their first strides into a new and better world. For those who want to profit from NFTs but are wary of the inherent risk in the market, investing in a business that deals exclusively with NFTs are a terrific option.
NFT-powered yield farming
NFT-driven AMMs are now available for yield farming as NFTs become a fundamental component of AMMs. Combining DeFi technologies maximizes digital asset yield. “Return farming”
We’ll use the Uniswap platform to show how LP-NFT tokens can be used as collateral or staked to earn extra rewards.
Consider it a way to boost a process’s yield. This allows yield producers to employ a multi-tiered income-generation approach. Farming is an easy way to profit from NFTs.
Final thoughts
If you pull out your passive income calculator, it’s easy to see that the returns you can get from NFTs are much higher than the traditional passive returns you can get from stocks or real estate. If you try out the tips we gave you, you’ll be well on your way to automating your passive income in no time!
