Non-fungible tokens (NFTs) have become insanely popular in the last few months. Nothing in the crypto world except Dogecoin comes close to NFTs in terms of craze. People, including the guy who bought Beeple’s NFT art collection for $69 million, are paying exorbitant prices for NFTs.
NFTs allow people to own uniquely valuable and verifiable digital assets on the blockchain. These assets could be GIFs, images, videos, photos, text, virtual trading cards, music, virtual real estate, video game skins, etc.
Over the last few months, artists, musicians, and other creators have joined the rush to create and sell their own NFTs. You can sell your NFT to anyone in the world without involving a dealer, thereby dramatically reducing the fees.
Royalties, but you have to sell
If you have created, purchased or earned an NFT, you know that the most common way to benefit from it is to sell it at a higher price.
But here’s the truth: An NFT is worth only what someone else is willing to pay for them. It is random and unpredictable. You could make a lot more - or a lot less - than what you paid for it.
But creators could earn royalties on their NFTs. They can set a “creator share” when selling their NFTs to earn a fixed percentage of proceeds from all the future sales of that piece.
A new NFT platform called Zora allows artists to benefit from the secondary sales of their NFT art. You can set the “creator share” as a percentage of the sale price.
The creator share is paid out automatically with smart contracts. Think of it as automatic, verifiable, and hassle-free royalties.
Another project called dCanvas is working on a major decentralized collaborative art sheet composed out of thousands of mini NFTs. The NFT holders and investors would have to collaborate to produce a grand piece of art and have the incentive to continuously optimize it together. After the Canvas completes, the project will become a DAO and commission limited art pieces that will produce royalties.
Without having to sell
What if you don’t want to sell your NFT? You want your NFTs to generate some passive income for you without having to sell them. You could easily earn money with your idle NFTs. Let’s explore them.
Borrow and earn staking rewards
One way to earn passive income is to use your NFT as a collateral to borrow cryptocurrencies that you believe have an upside potential. And then stake the cryptocurrency to earn a passive income.
This way you could benefit from both the staking rewards and the expected price appreciation.
Staking is the process of validating transactions and participating in other network activities on a Proof of Stake (PoS) blockchain. Stakers lock their tokens in a wallet or delegate it to a staking pool for that purpose.
On the PoS blockchain, stakers are rewarded for contributing to the network. The annual percentage yield (APY) ranges from 3% to 300% depending on the cryptocurrency you stake.
Another project under development, Hoard Exchange, is about to launch an NFT marketplace for gamers and game developers that also allows people to use their NFTs as a collateral to obtain loans. It also facilitates buying, selling, and trading of NFTs. You can trade in-game items, domain names, digital art, and other assets on Hoard Exchange.
Rent out your NFT for a fee
If you have non-fungible tokens that you don’t intend to sell, you can make some money by renting it out. Someone who wants access to your NFTs can borrow them for a fraction of the cost of purchasing them.
Hoard Exchange is set to launch the ‘Rent’ feature on its marketplace towards the end of July 2021. That’s just a couple of months away. Many other platforms such as Yiedl and Flow are also developing their own NFT rental marketplaces.
The rental marketplaces allow NFT owners to determine the rental price, the maximum rental period and the NFT price. The borrower has to put up the NFT price as collateral before they can rent.
The NFT landscape is still in the early stages in terms of the infrastructure. We will get to see more exciting ways to earn passive income with your idle NFTs in the coming months.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.