What is NFT staking?
Locking up a crypto token or NFT into a crypto vault is known as staking.
Staking is a powerful tool for creators and teams who want to allow their fans to participate in the growth of their NFT ecosystem. It's also a way for collectors to earn rewards through their holdings or investment portfolios.
As we experiment with staking as a new way to engage with NFTs, we must distinguish between what constitutes staking and what doesn't.
The easiest way to think about NFT staking is to lend your NFTs to a smart contract. Unlike traditional lending in the real world, however, all of the terms and conditions governing this crypto loan exist within the confines of a smart contract.
To unstake an asset, owners need to send a transaction with the corresponding instructions to the smart contract that holds their assets. The NFTs can be staked in a smart contract that allows users to lock up their tokens for a specific amount of time. After the specified period has elapsed, the user will be able to withdraw the NFTs from the smart contract. If other pre-defined conditions have been met, for example, if a specific event occurs, the user may be able to withdraw their NFTs from the smart contract before they expire.
Why should I stake my NFTs?
Staking your NFTs is a great way to support your favorite creators and teams. It's also a great way to signal that you mean to stick around, which can lead to:
New tokens! By staking, you earn access to new tokens in the future. For example, if an artist creates a new piece of art as part of their core offering (and it's not available for sale), they may offer 1-3% of those newly minted assets as rewards for stakers who have been with them from the beginning.
Unlock access! You can unlock special perks once you stake enough assets that reach a certain threshold—say, 30-day duration. These vary across creators and teams but could include exclusive access (e.g., early previews of new work) or token-gated content (e.g., unique videos).
There is always some degree of risk involved when staking. You could lose your NFTs due to a compromise in the security of staking smart contracts.
As a rule of thumb, we recommend NFT staking only with NFT projects that have verified their code on Blockchain Explorers like EtherScan.
How do I stake my NFTs?
Stake your NFTs by depositing them into your wallet. You can find projects or platforms which support NFT staking on the blockchain explorer, like EtherScan. Once you've found a project or platform, deposit the NFT(s) that you want to stake into your wallet and wait until they are fully confirmed before moving on to the next step.
Once you've deposited your NFT(s) into your wallet, confirm the transaction by paying a gas fee which costs as low as $2.95 (at 17 gwei). The amount of gas needed depends on how large/complex the smart contract is and how many transactions have been made recently on the Ethereum network so that it may be different every time, but bear in mind that if there isn't enough gas, this transaction will fail!
Congratulations! You have now successfully staked your NFT.
Be sure to check in on your staked NFTs once in a while. If any changes in the platform or event would affect what happens after completion, be sure to revisit the staking contract page before withdrawing funds to avoid missing out on any additional rewards.
Disclaimer: This is not financial advice. Always do your research before investing in any cryptocurrency or NFT project.
When should I stake NFTs?
Like any investment, there are no hard-and-fast rules for when you should stake your NFTs. The best time to stake will depend on your goals, risk tolerance, and the current market conditions.
When choosing a project to invest in, it's worth looking at their roadmap. If a team is clear about development plans for the project they have built, you can use this information to indicate how much value it may have in the future. You can also learn more about how often an artist plans on releasing new work by looking at their previous releases and following them on social media channels such as Twitter or Instagram.
When it comes to deciding when to stake NFTs, consider where you see yourself concerning these factors:
- Your investment goals: Are you holding your NFTs for the long term or expecting that they will increase in value quickly?
- Your risk tolerance: How risky is this project compared to others you have invested in?
- Market conditions: How volatile has the market been over recent months, and how likely do you think it will change direction soon? If there has been a lot of volatility recently with some significant shifts up and down, then staking might not be the best option for you. If the market has been relatively stable for a while, it could be worth giving it some thought.
Where can I stake NFTs?
It cannot be easy to know where to start with so many options available. Here are some of our favorite staking platforms:
NFTX is a new NFT staking platform built on top of Ethereum. It has a fantastic user interface for managing your staked assets and is one of the few platforms that allow you to stake multiple tokens at once.
WhenStaking is a multifunctional platform that allows you to stake your NFTs, create auctions, list items for sale, and more!
LooksRare allows creators to sell their digital assets through auctions or direct sales using ETH or DAI (in addition to other cryptocurrencies).
Are you interested in launching your own NFT staking platform? Reach out to us.