You have probably come across people claiming to make loads of cash from non-fungible token (NFT) investments. Are you interested but still don’t know where to start? Well, this guide is for you. We will teach you the various ways you can use your NFTs to generate income.
NFT Market Overview
The NFT market became popular in 2021 when it recorded a trading volume worth $23.5 billion. The biggest NFT sale also happened that year. The ‘Everyday: the First 5,000 Days’ NFT sold for over $68 million.
But what’s an NFT? Simply put, an NFT is a unique digital asset representing ownership of a particular item. Most NFTs live on the Ethereum blockchain. However, other networks like Solana and Polygon have seen increased NFT activity in recent months due to their ability to offer speedy and cheaper transactions. Some of the popular NFT collections include Bored Ape Yacht, DeGods, CryptoPunks, and Azuki.
Where can you trade NFTs? The hype around these digital assets has led to the development of multiple marketplaces that facilitate their trading. They include Rarible, Magic Eden, Blur, and OpenSea, which is the largest by trading volume.
How to Generate Income With NFTs
Here are five proven ways to earn extra money with your NFTs:
NFT Staking
Staking is no longer limited to cryptocurrencies alone. Today, Decentralized Finance (DeFi) platforms like Only1, NFTX, Kira Network, and Splinterlands have made it possible for NFT holders to stake their art pieces in exchange for rewards.
These protocols usually reward stakers with their native tokens, which also serve as governance tokens. That means, along with earning yield, you also get to influence the direction of the DeFi platform. It is worth mentioning that you can stake the generated rewards on other DeFi projects to diversify your income streams.
Flipping NFTs
This is the most common method of earning with NFTs. It involves minting an NFT at a lower price and selling at a higher price on a secondary marketplace. However, there are several factors that must be considered to make profits through flipping NFTs. For instance, before minting an NFT, ensure it has a demand. Otherwise, acquiring an NFT that people are not interested in makes it challenging to find buyers.
NFT Lending
Besides staking, NFT lending is another recommendable way of earning passive income. ReNFT, for example, is a platform that lets users lend their unique digital assets. Lenders currently charge between 0.2 and 2 WETH, depending on the borrowing period. Further, Fantasy football enthusiasts can lend their NFT footballers cards on FootballCoin, to generate more income.
Earn Royalties From NFTs
As an NFT creator, you can continue making money from your collection even after it’s sold out through the ‘Creator Royalties’ program implemented by most leading marketplaces. That means every time your NFT is traded on a marketplace, you earn a percentage of the transaction amount, usually 2.5%.
You don’t need to enforce these royalties manually, as smart contracts do the job for you.
Earn Through NFT Gaming
NFT-powered games allow gamers to get paid for doing what they love. Popularly known as ‘play-to-earn,’ these games reward players with native tokens which can be traded for well-known cryptocurrencies like USDT and Ethereum. Axie Infinity, Decentraland, and Cryptokittes are examples of NFT-powered games.
It is important highlighting that NFTs bought in one game can be transferred to others, thanks to the Web3 principle of interoperability. This gives players the opportunity to earn as many tokens as possible. You can also sell the NFTs whenever you wish.
Conclusion
Now that you understand how to generate income with your NFTs, it is time to put them into use. For those looking to buy their first NFTs, make sure you choose the right ones to avoid acquiring those without value. Lastly, if you are an NFT creator, ensure you include a royalty fee in your next collection.
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