6 Ways to Earn Passive Income With NFTs

April 19, 2022
Article

Isn’t passive income just the best way to make money? After all, Robert Kiyosaki, author of the famous Rich Dad Poor Dad, once famously said: “A wealthy person is simply someone who has learned how to make money when they’re not working.”

From real estate to stocks, passive income comes in many forms. But interestingly, non-fungible tokens (NFTs) represent a very untapped stream of passive income. There are already various promising strategies investors can leverage. Let’s take a look. 👀

1. Royalties for creators

With over $5 billion in profit recorded in NFT trading in 2021, there’s no doubt that investors are flocking to get their slice of the pie. Perhaps the most direct way to do that is by generating passive income from NFT royalties through secondary sales.

You don’t exactly need to be an artist to create NFTs. Whether it’s music, code, a podcast, or even a poem, creators are now turning all kinds of digital assets into objects of value. You can set your smart contract to generate profits (with the royalty industry standard being around 5-10%) each time someone resells your piece on the secondary market. And the best part? All this happens automatically without you having to lift a finger.

2. Staking NFTs for long-term returns

Today, staking is perhaps the most popular passive income stream for NFT holders, allowing them to retain ownership over the token while using it to generate profits.

Just like staking cryptocurrency, staking NFTs means that you have to lock or deposit your tokens to drive passive income. By doing that, you basically pledge them to a blockchain network and get crypto as a reward. However, while staked, you can’t sell, move, or trade your NFTs – meaning that it’s a great strategy if you’re planning to hold them for a long time.

When staking, platforms look at the rarity of the NFT and calculate an annual percentage yield (APY). Generally, the rarer the NFT, the higher the APY – and the higher the profits.

3. Renting NFTs – a goldmine in gaming

It’s no secret that blockchain games are fast gaining traction. In the third quarter of 2021, they were responsible for 22% of all NFT trading volume – and with that come many passive income opportunities for investors.

While NFT rental could happen in any space, their utility in gaming makes it a particularly attractive opportunity. One of the latest trends in games is players being allowed to rent NFTs to enhance their experience. Items rented can represent anything from character skins and impressive weapons to unique tools that unlock new in-game possibilities. 

Leveraging the different platforms on the market, you can rent out your NFTs to players, with smart contracts governing the whole process (including the duration of the rental agreement and lease rate).

4. Passive income through NFT utilities

Naturally, if the value of the NFT you purchase goes up, you can sell at a profit. But did you know that there are also tokens that actually encode profit into their very existence?

Utilities, always defined by the underlying smart contract, bring the holders diverse benefits. Some of the most common ones include events invites and access to exclusive meetups, but they can offer some great opportunities for passive income, too. For example, the project team can use the pool of funds generated by selling the collection to reinvest and share the profits with the NFT holders.

5. Providing liquidity with NFTs

Today, NFTs are already integrated within DeFi infrastructure, meaning they have the ability to provide liquidity. The first step is to offer your tokens into a liquidity pool. A liquidity pool is a collection of digital assets locked in a smart contract pledged by multiple investors – and then used by the platform to hand out loans.

There are already various platforms that allow users to generate passive income by providing liquidity. Using them, you can sell your NFT reward whenever you like to exit the liquidity pool.

6. Yield-farming through NFTs

Yield-farming is a strategy that was born as a way to generate income in DeFi ecosystems – and it’s now entering the NFT space too. It’s a method where investors look to earn returns on top of returns by leveraging yields from one platform (or an ecosystem like a game) and investing elsewhere.

For example, suppose it were the game producers running this venture. In that case, they could set up the system for users to benefit and generate income by participating as yield farmers and liquidity providers. Animoca Brands was one of the pioneers, launching its REVV-SAND marketplace within Uniswap in early January. Through it, users can participate as liquidity providers and earn exclusive, REVV-branded NFTs.

There are already many exciting NFT opportunities to earn passive income. The best news is that as the development of the metaverse increases, we can only expect to see more emerging quickly.

Don’t sleep on NFTs any longer. To stay on top of the latest blockchain trends, make sure to read our blog. 💪

Isn’t passive income just the best way to make money? After all, Robert Kiyosaki, author of the famous Rich Dad Poor Dad, once famously said: “A wealthy person is simply someone who has learned how to make money when they’re not working.”

From real estate to stocks, passive income comes in many forms. But interestingly, non-fungible tokens (NFTs) represent a very untapped stream of passive income. There are already various promising strategies investors can leverage. Let’s take a look. 👀

1. Royalties for creators

With over $5 billion in profit recorded in NFT trading in 2021, there’s no doubt that investors are flocking to get their slice of the pie. Perhaps the most direct way to do that is by generating passive income from NFT royalties through secondary sales.

You don’t exactly need to be an artist to create NFTs. Whether it’s music, code, a podcast, or even a poem, creators are now turning all kinds of digital assets into objects of value. You can set your smart contract to generate profits (with the royalty industry standard being around 5-10%) each time someone resells your piece on the secondary market. And the best part? All this happens automatically without you having to lift a finger.

2. Staking NFTs for long-term returns

Today, staking is perhaps the most popular passive income stream for NFT holders, allowing them to retain ownership over the token while using it to generate profits.

Just like staking cryptocurrency, staking NFTs means that you have to lock or deposit your tokens to drive passive income. By doing that, you basically pledge them to a blockchain network and get crypto as a reward. However, while staked, you can’t sell, move, or trade your NFTs – meaning that it’s a great strategy if you’re planning to hold them for a long time.

When staking, platforms look at the rarity of the NFT and calculate an annual percentage yield (APY). Generally, the rarer the NFT, the higher the APY – and the higher the profits.

3. Renting NFTs – a goldmine in gaming

It’s no secret that blockchain games are fast gaining traction. In the third quarter of 2021, they were responsible for 22% of all NFT trading volume – and with that come many passive income opportunities for investors.

While NFT rental could happen in any space, their utility in gaming makes it a particularly attractive opportunity. One of the latest trends in games is players being allowed to rent NFTs to enhance their experience. Items rented can represent anything from character skins and impressive weapons to unique tools that unlock new in-game possibilities. 

Leveraging the different platforms on the market, you can rent out your NFTs to players, with smart contracts governing the whole process (including the duration of the rental agreement and lease rate).

4. Passive income through NFT utilities

Naturally, if the value of the NFT you purchase goes up, you can sell at a profit. But did you know that there are also tokens that actually encode profit into their very existence?

Utilities, always defined by the underlying smart contract, bring the holders diverse benefits. Some of the most common ones include events invites and access to exclusive meetups, but they can offer some great opportunities for passive income, too. For example, the project team can use the pool of funds generated by selling the collection to reinvest and share the profits with the NFT holders.

5. Providing liquidity with NFTs

Today, NFTs are already integrated within DeFi infrastructure, meaning they have the ability to provide liquidity. The first step is to offer your tokens into a liquidity pool. A liquidity pool is a collection of digital assets locked in a smart contract pledged by multiple investors – and then used by the platform to hand out loans.

There are already various platforms that allow users to generate passive income by providing liquidity. Using them, you can sell your NFT reward whenever you like to exit the liquidity pool.

6. Yield-farming through NFTs

Yield-farming is a strategy that was born as a way to generate income in DeFi ecosystems – and it’s now entering the NFT space too. It’s a method where investors look to earn returns on top of returns by leveraging yields from one platform (or an ecosystem like a game) and investing elsewhere.

For example, suppose it were the game producers running this venture. In that case, they could set up the system for users to benefit and generate income by participating as yield farmers and liquidity providers. Animoca Brands was one of the pioneers, launching its REVV-SAND marketplace within Uniswap in early January. Through it, users can participate as liquidity providers and earn exclusive, REVV-branded NFTs.

There are already many exciting NFT opportunities to earn passive income. The best news is that as the development of the metaverse increases, we can only expect to see more emerging quickly.

Don’t sleep on NFTs any longer. To stay on top of the latest blockchain trends, make sure to read our blog. 💪

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