As the NFTs marketplace continues to grow, developers, collectors, and holders are starting to explore new use cases for NFTs. For example, one of the recent use cases for NFT is "staking," also referred to as NFT staking.
As the name suggests, NFT staking is the act of locking up non-fungible tokens (NFTs) or collection on a platform or pool to earn rewards from the staking platform. By locking up or staking NFTs, users can get rewards based on the number of NFTs staked and the annual percentage yield (APY). NFT staking allows its holders to earn a passive income in the crypto ecosystem while maintaining ownership of their NFTs.
It is similar to staking your Bitcoin (BTC) or Ethereum (ETH); however, one needs a cryptocurrency wallet with NFTs. Also, like the DeFi yield farming protocol, NFT staking depends on a Proof of Stake (PoS) mechanism to reward its participants.
The rewards earned from staking NFTs depend on the kind and platform used. The majority of the platforms issue their staking rewards in a platform's native utility token, which can later trade against other cryptocurrencies or fiat currencies listed on exchanges. There are also daily or weekly rewards up for grabs.
Some NFT staking platforms feature a decentralized autonomous organization (DAO), such that participants can lock up their assets in the DAO pool to take part in the platform's governance and vote proposals.
NFT staking creates a new opportunity for NFT holders to monetize their assets or NFT collections and for the Play-to-Earn (P2E) gaming industry and other areas operated by blockchain technology. It creates new use cases for NFTs and potentially attracts more people to take part.