How to Stake Your Own NFT [2023]

How to stake your NFTs

This article will show what NFT staking is and answer the question if it is worth doing it. Chances are that you’ve never heard of it, since staking NFTs is still a very new way of making money.

What is a NFT?

The word NFT is short for „Non Fungible Token“. First of all we need to clarify the term „token“. A cryptocurrency that is operating on an existing blockchain is called a „token“. A cryptocurrency that has its own Blockchain is a „coin“. Therefore, Bitcoin is a coin for example, as its Blockchain is running on its own. Then there are cryptocurrencies like Loopring for example, which operate on the Ethereum Blockchain, therefore they are tokens. If you have traded NFTs before, you would know how you pay a specific cryptocurrency for it, most likely ETH or SOL. That is because these NFTs are simply Tokens on the Ethereum or Solana Blockchain (Or other platforms), but there is a key difference between these types of tokens and regular ones.

That is where the term „Non fungible“ comes in. A token can be both fungible (exchangeable) and non-fungible (non-exchangeable). Basically, “non-exchangeable” in this regard simply means that it is a unique digital asset that cannot be exchanged one-for-one for another. Maybe you have heard of the mis-stamping/printing of coins or banknotes before. Basically, they are still normal FIAT currencies. However, due to their uniqueness thanks to their factory flaw, they are much rarer and valuable. A collector will not value a normal $100 bill the same way as a $100 bill with factory flaws, most of the time they are truly unique. The normal bill is therefore „fungible“ as it can be replaced 1:1 by another $100 bill, the misprinted one can not. To be honest, it is kind of wrong to compare FIAT currencies to cryptocurrencies, but hopefully you understood the comparison more easily that way.

A more correct comparison would be Bitcoin: 1 Bitcoin will always equal 1 Bitcoin. There are no rarer or one of a kind Bitcoins that are more valuable. NFTs are unique assets that have been brought onto the blockchain, mostly drawings, digital art, music or videoclips.

What is NFT staking?

If you’ve been into the NFT space for a while, you would know that the only way to make money from them is to either a) create, mint and sell or b) simply trade them. However, this changes now with the feature of staking your digital art.

Maybe you’ve heard of staking cryptocurrencies before. Instead of letting your cryptocurrencies go to waste by simply letting them on your wallet, you lock them in somewhere else to earn passive income by lending them. This originated from the so-called proof of stake mechanism. Here transactions are validated by users that hold (or lock in) the currency in the wallet. As a reward for holding, users will receive either the currency itself or a related one. The same applies for the NFT space: You can make money from the increase in value of your NFT, while making extra money staking it. You don’t have to sell your NFT to earn money. In NFT staking, an NFT process within the NFT project itself or on an external platform allows holders to receive “staking rewards” for staking their NFTs.

Is staking NFTs a lucrative idea?

The question very much depends on the chain you are using. If we are talking about the Ethereum-Blockchain, chances are that it won’t be so profitable. You will rarely see a contract there which makes this whole process gas efficient. That means that the rewards could be smaller than the fees you have to pay. On the Solana chain however, things can look differently.

The type of rewards you could get from staking is depending on your NFT and the platform you are using to stake it. Mostly, it is a native form of cryptocurrency which you will receive each day or week.

To make the most money out of this you need to know which NFTs are worth staking the most. For this, you will need to do a lot of market research to find out where the real opportunities are. A good example of this are investors who were early on Axie Infinity, one of the biggest Blockchain games ever. They not only profited from the huge price increase of the token, they also could secure a big passive income by staking their NFTs (Not to mention that in such play-to-earn games, you can also get free NFTs, not only cryptocurrencies). The more connected you are into the NFT space and the more time you invest (vice versa: the more experience you gain), the more likely it is to find out good opportunities.

Where can I stake my NFTs?

Depending on the chain you are using, there are many options on the web. Examples are https://nftx.io/, https://whenstaking.com/, https://only1.app/, https://kira.network/ etc. It is highly recommended that you research the platform/provider before using it. See what the experience of other users was like. 

To stake your NFT, you need a crypto wallet that supports it. After this, connect your wallet to the staking platform to send them to the provider. There should be a „staking“ section somewhere.

—> Can I stake every NFT I have? No, sadly that is not possible. This all depends on the smart contract which is available for your NFT. This works better for normal cryptocurrencies/fungible tokens, as the proof of stake mechanism is more or less the same for all PoS cryptocurrencies.

NFTs however are non-fungible tokens, they have a special use case, like being usable in an online blockchain game. Therefore not all NFTs offer the possibility to get staked.

Staking NFTs comes with risk

Staking cryptocurrencies carries a certain amount of risk, so does staking your NFTs. At the end of the day, you are giving away your tokens. There are some things that could occur here: Validator errors, weaknesses in the smart contract code that could get exploited, impermanent loss/theft and don’t forget the lockup periods.

Also, be reminded that investing/owning NFTs is a risk by itself. Aside from staking, you are owning a very volatile, illiquid and speculative asset. Staking NFTs, even NFTs in general, are still a new technology. So only time will reveal where the biggest risk can occur, and which will go away. Always beware of scammers and fraudsters, no matter what you are doing with your NFTs.