Member Content

NFT Staking Explained: Generating Value

So you’ve got a nice collection of non-fungible tokens (NFTs). After a few months, you have managed to amass a respectable amount of those little digital wonders. You might have even been able to sell one or two, earning you enough for a couple cups of coffee in your nearest franchised outlet. But as you take sips off that hard-earned coffee and browse through your NFT portfolio, you can’t help but wonder about the value hidden there, just waiting to be uncovered.

Question is, how to unlock the value in those NFTs?

NFT staking: definition

When they hear the word staking, most people’s minds would harken back to the old Hammer films, when the nefarious Dracula would meet his demise with a wooden stake through the heart. And yes, that is one traditional understanding of the word staking.

But it’s 2022 now, and though Count Dracula still roams somewhere down the darkest halls of our dreams, staking now means something altogether more profitable.

In today’s digital times, and in the context of NFTs, staking is sort of a game of investment/rewards. You commit (‘lock’) your NFTs into a platform or a protocol for a set period of time, and you receive rewards (or other benefits) in exchange for such commitment.

Staking addresses one NFTs’ inherent issue: liquidity. Remember, NFTs are tokenized assets that you can sell, trade, or, as we see in this article, stake for a yield. Staking enables earning passive income off your NFT portfolio while retaining ownership.

Fungible vs non-fungible: an explanation

The concepts of fungibility and non-fungibility had, for a long time, been well outside the layman’s lexicon. But once NFTs entered public discourse, people began to learn more about what these concepts mean.

In short, fungibility means the possibility of using goods, items, or commodities interchangeably because they have the same value. Banknotes or coins, pieces of the same fruit, or a liter of petrol are good examples of fungibility.

Non-fungibility denotes uniqueness. Collectible items, including original oil paintings, baseball cards, art pieces, diamonds, and vintage cars can be considered non-fungible.

It is the latter concept that emerges as most interesting, as non-fungibility carries value, and it is a value that NFT staking unlocks.

NFT staking: how it works

Unlocking the value of your NFTs through staking is easier than you think. All you need is a crypto wallet and, well, NFTs. The more the better. Then, choose a protocol or a platform to stake your NFTs in, and wait for the rewards, which might be distributed daily, weekly, or in any other fashion. It really is that simple.

NFT staking is akin to yield farming, insofar as you lock a certain amount of wealth (NFTs in this case) and receive a certain percentage of rewards based on the amount staked, the period of time that the NFTS will be locked, and other parameters.


Read more here.

Share this Article
Related Insights
Holland Fintech Digital Transformation Paper 2024
Holland Fintech is proud to present the Digital Transformation Paper 2024. This whitepaper, led by the Holland Fintech working group Digital Transformation in collaboration with Accenture, provides valuable insights into the dynamics and key factors influencing successful collaborations between fintechs and incumbents.
Holland Fintech Pavilion at Money 20/20
Money 20/20 – Join our Pavilion! The Holland Fintech Pavilion offers a unique opportunity to connect with a global audience of fintech professionals. Located at the heart of Money 20/20, the pavilion provides a central hub for networking, collaboration, and exposure.
Amsterdam Fintech Week
Amsterdam FinTech Week is back on 2-4 October 2024! Be a sponsor, co-organizer, or just participate in our community events.