Lily R.
Lily R.
Jan 06, 2023

What Is NFT Staking? Is It Safe? What Are The Best NFTs?

#nft#eth
tl;drDuring the 2021 NFT craze, everyone rushed toward this new technology that was making its early investors millionaires. No hype lasts long, and many ended up with NFTs lying idle in their wallets. The bear market made things worse, and many were left with illiquid NFTs. One way to reverse this situation is NFT staking. Keep scrolling to learn to create a new income stream by staking your idle NFTs in the best NFT staking platforms.
What Is NFT Staking? Is It Safe? What Are The Best NFTs?
What Is NFT Staking? Is It Safe? What Are The Best NFTs?
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What Is Staking?

Blockchains with Proof-of-Stake (PoS) consensus mechanisms are well-known for consuming way less energy than the traditional Proof-of-Work (PoW) models. Also, PoS offers faster transactions, more scalability, and more security. Learn all about consensus mechanisms in crypto.

PoS blockchains require participants to stake their assets, which involves locking up crypto assets in a blockchain platform for a certain period to help with the blockchain's operations. Stakers receive more crypto assets as rewards for their contribution to the platform. Learn about the different types of staking.

Since the day staking was introduced, many have considered it a new, decentralised and independent way to earn passive income. Many staking platforms offer a high Annual Percentage Yield (APY) that isn’t achievable in the traditional finance system.

Crypto assets can be staked on different staking platforms despite the blockchain they’re on. In fact, you can even stake Bitcoin and NFTs! To learn how NFT staking works, we first need to refresh our memory about NFTs.

Read more: What Is Crypto Liquid Staking? Which Coin Has The Highest Reward?

What Is NFT?

In short, an NFT (or Non-Fungible Token) is a cryptographic asset based on a blockchain. NFTs come in various forms, such as pictures, music, tweets, videos, etc. As a matter of fact, everything can become an NFT on the blockchain.

NFTs are similar to collectables and follow the same logic. An NFT’s value is determined by its rarity, edition, and characteristics.

Moreover, many NFTs offer real-world utility. For example, an artist can mint an NFT collection and announce that every collector of one of those NFTs can attend the artist’s private gallery.

Without a doubt, NFTs have provided a new investment opportunity, and many have made millions from just investing in a single NFT. If you’ve invested in NFTs or are planning to do so by NFT staking, you can profit even more from your investment, which is NFT staking. We’ll elaborate on how it works below.

What Is NFT Staking?

NFT staking means an NFT owner stakes their NFT on either the NFTs native platform or a third-party platform. NFT owners lock up their NFT into the platform for a set period to earn staking rewards as a form of passive income. Find the 10 best coins to stake in 2023.

The lock-up periods vary from platform to platform. Some platforms offer NFT staking for a strict time limit, while others have an indefinite staking lock-up period.

You may be asking yourself, “why would I want to trust another platform to keep my NFT and lock it up for quite some time?”. Let’s see why!

What Is The Purpose Of NFT Staking?

There are several reasons why you should consider staking your NFTs, especially if you plan to hold your NFT in the long run and don’t want to sell it anytime soon.

NFT staking can provide a passive income stream, give platform governance rights, and grant membership privileges. Let’s have a look at each of these.

Passive Income

The primary purpose of NFT staking is to generate passive income. When you stake your NFT, the staking platform will calculate the value of your NFT and your estimated income and APY based on the NFTs' rarity, value, and type.

Once you sign the NFT staking contract, your NFT is locked in the platform, and you start earning rewards weekly, monthly, or yearly, depending on the NFT staking platform.

Platform Governance

Some platforms allow users to stake their NFT and, in return, earn a share of the platform's governance. Staking NFTs can be the gateway to entering the Decentralised Autonomous Organisation (DAO) that runs the NFT staking platform. Thanks to joining the DAO, users are granted voting rights, meaning they can vote on proposals and make changes to the platform.

Membership Privileges

Other than earning tokens, some NFT staking platforms offer real-world utilities in exchange for the staked NFT. A well-known example is Binance, which provides a utility token tied to sports teams.

This utility token is earned once you stake an NFT into Binance, which can be used for trading with priority ticket sales and involvement in team decisions.

As seen above, there are various reasons why people stake their NFTs. To understand how NFT staking can provide these benefits, we need to learn more about its mechanics and how it exactly works. Let’s dive in.

How Does NFT Staking Work?

Lately, blockchain projects have been leaning towards the Proof-of-Stake (PoS) consensus mechanism because of its sustainability and efficiency. 

PoS has network participants lock up (stake) their tokens and weigh their rewards according to the number of their locked-up tokens. The more you stake, the more you earn.

This exact process of staking is also doable with NFTs, as investors can lock up their NFTs in a staking platform for a determined period to earn interest.

Just like every financial opportunity, NFT staking has risks and benefits attached to it. We’ll dive into some common risks and benefits of staking your NFT.

Risks Of Staking NFTs

No investment decision is risk-free, and investing in NFTs is no exception. Two of the most common risks in NFT staking are rug pulls and price volatility. Let’s elaborate on them below.

Rug Pulls

Although your NFT is staked on the platform, the risks of rug pulls and hacks aren’t always zero. Rug pulls typically happen when the developers decide to leave the project, which often results in users holding useless tokens and/ or NFTs.

Price Volatility

The crypto market is infamous for its volatility, and during your NFT’s lock-up period, your NFT might see a significant value rise or drop. You need to take this into consideration, especially while staking on platforms with longer lock-up periods.

You won’t be able to sell your NFT for some time, but if you plan on making long-term investments by staking your NFT, you don’t need to worry too much about temporary price changes.

Although no investment is risk-free, it isn’t benefit-free either! Let’s take a look at the positive side and learn more about the benefits of staking NFTs.

Benefits Of Staking NFTs

What is the point of staking NFTs if they have no benefits? Considering the benefits, NFT staking can make a profitable investment. With staking your NFT, you can earn passive income while enabling access to community governance rights. Let’s go through each of the benefits.

Earning Passive Income

Many crypto users decide to hold a cryptocurrency for a long time to take advantage of the gradual price increase. Since they don’t intend to sell their assets anytime soon, they stake the asset to earn additional passive income from their investment.

You can apply the same logic to NFTs. If you’re planning to hold your NFT as a long-term investment, you can stake it to earn some bucks passively.

Governance Rights

Staking platforms often reward stakers with their native tokens. These tokens not only hold value but also give stakers access to additional features of the platform, like governance rights and voting power.

These rights allow stakers to vote on changes to the platform that can increase their profits even more. For example, a change in staking APY calculation can result in more profits for stakers. To sum up, you can check the table below containing the benefits and risks of NFT staking.

Considering NFT staking’s risks and benefits, you may consider starting this journey. But there are a lot of amazing NFT collections out there, and you may get overwhelmed choosing the best NFT for staking. Read the following section to avoid the hassle!

Risks and Benefits of NFT Staking
Risks and Benefits of NFT Staking

How To Choose The Best NFT To Stake?

Depending on your ultimate investment goal and the type of NFT you own or plan to own, the methods of choosing the best NFT to stake can vary.

There are two main types of NFT staking platforms to choose from.

  1. The platform allows staking for its own native NFTs
  2. The platform enables staking for NFTs from other platforms

If you already own an NFT from a platform that offers staking, it is best to stake your NFT on its native platform. But if you don’t own any NFTs yet, you can take a look at each of these two types of platforms and check the estimated APY and staking conditions. 

When choosing the best NFT to stake, you need to keep an eye on essential factors that can significantly impact your investment. Let’s get to know them!

Factors To Consider In NFT Staking

Before staking your NFT, you need to take the following factors into account.

NFT Stakeability

Not all NFTs are stakeable. Before considering staking your NFT or buying an NFT to stake later, you need to make sure that the NFT can be staked.

NFT Lock-Up Period

Not all NFT staking platforms require you to lock up your NFT for a certain period. The lockup period can range from days to years. So make sure to check it before staking your NFTs.

Annual Percentage Yield (APY)

The Annual Percentage Yield (APY) is the return you earn on your staked NFT. Many DeFi projects offer higher APYs, and each platform uses a different method to calculate the APY. Moreover, the price and rarity of the NFT you’re staking can influence the APY.

Community Participation

Many NFT staking platforms reward the stakers in their native cryptocurrency, which are usually utility cryptocurrencies. These cryptos are often used for fueling the project’s features, and by owning them, users can access these features. 

Some of these tokens are also governance tokens that grant voting rights to their holders. With governance tokens, investors can participate in the community and vote on changes to the platform. What makes governance rights and community participation valuable is these changes can result in more profits for investors.

Crypto Volatility

As the staking rewards are often paid in crypto, the volatility of cryptocurrencies can influence the value of both your NFT and the rewards you receive from staking it. Before staking your NFT, take a look at the protocol’s staking reward token’s price history, and look for any unnatural pumps or dumps in price, which helps you have a better outlook on your investment’s future payoff.

Knowing all the factors you need to consider before staking your NFT and starting to earn rewards, we should go one step ahead and learn how exactly NFT staking rewards are calculated.

How Are NFT Staking Rewards Calculated?

Each NFT staking platform offers a determined reward rate to incentivise NFT holders to stake their NFTs for as long as possible. Similar to crypto staking platforms, you can preview the Annual Percentage Yield (APY) of the NFT you’re about to stake.

Since the exact reward value varies by NFTs, not every NFT staking platform shows the exact APY. They rather estimate the token rewards that can be earned during the staking period.

What NFT staking platforms have in common is that they reimburse NFT stakers by rewarding users with the platform’s native utility token. This utility token usually offers additional perks like voting rights and DAO participation.

Moreover, some platforms allow you to stake the tokens you’ve earned from staking your NFT, enabling you to increase your return on investment even more!

Below is a collection of the top 10 NFTs you can stake to earn the highest APYs. We’ll elaborate on each project and what their NFT staking functionalities are.

The Best NFTs To Stake

Typically, among NFT staking platforms, those that allow staking for their own NFTs offer higher APYs. In addition to providing passive income options, these platforms usually offer exclusive token functionalities for investors, further incentivising them to participate in the community.

Not every NFT is worth investing in. So, we’re about to help you find the best ones by introducing the ten best NFTs to stake and what makes them the best projects offering NFT staking for their products.

Wolf Game

Wolf Game is a Metaverse gaming project that offers NFT staking in its main gameplay. Wolf Game NFTs are available as Wolves and Sheep. To protect the sheep NFTs from wolves, players need to stake their sheep.

Sheep stakers would be rewarded with WOOL tokens. If sheep NFTs are not staked, the wolves steal the WOOL tokens earned by the player throughout the game.

However, there will be only a total of 5 billion WOOL tokens. When the WOOL circulating supply reaches 2.4 billion, the staking faucet will be turned off. Those interested in this platform and WOOL token need to consider getting started sooner to make the most of its staking option.

Axie Infinity

Axie Infinity is a Metaverse Play-to-Earn (P2E) game where players can battle each other with their Axie NFTs. Each of these Axies features unique characteristics, strengths and weaknesses.

Axie Infinity’s Metaverse is divided into pieces of land, and each land is represented by land NFTs. These pieces of land can be upgraded to other elements or used as a home for Axies.

Axie Infinity supports staking for both its native cryptocurrency, AXS, and the land NFTs. For both of these, the staking rewards are given in AXS.


Sandbox

Sandbox was the pioneer blockchain game platform to combine NFTs with in-game assets. These player-owned game assets are used for creating gaming experiences, such as game items, avatars, and land.

On Sep 2022, Sandbox announced that landowners can now stake their SAND tokens on the Polygon network. While it isn’t technically considered NFT staking, owning NFTs is required to stake tokens and earn rewards. Landowners that stake their SAND tokens are rewarded with more SAND with an exclusively high APY.

Tamadoge

Tamadoge (TAMA) is a meme coin project that integrates NFT ownership and P2E gaming elements in its ecosystem. Tamadoge's universe revolves around the NFT collection of pets.

These pets allow users to challenge other players and win rewards. Players can also feed and treat their pets so they can grow up and get ready for battles.

Tamadoge pets don't have a traditional staking function, but the platform implements a similar protocol. In-game mechanics allows holders to return rewards via their ownership of NFTs.

Tamadoge is planning to integrate many new financial functions into its token TAMA. Check the Tamadoge price prediction to see if this token should hold a place in your portfolio!


Silks

Silks is a P2E horse racing game where players can buy, breed, trade, and race their horses. A unique feature of Silks is if your horse wins in real-world horse racing since you own the horse’s Metaverse counterpart, the platform rewards you.

Silks NFTs are the key to accessing the game’s features and consist of Silk Avatars, Horses, Land, and Stables collections. Users need a Silks Avatar to participate in the game. Other NFT collections mentioned have other complemental functions in the game.

If you want to earn rewards on this platform but don’t have the time to participate in the game, you can stake your NFTs in the Community Horse Farms and earn high APYs.

Lucky Block

Lucky Block is known for hosting competitions that provide its NFT holders with a chance to win prizes. Investors can also earn rewards solely for participating.

Lucky Block is the first NFT project to offer blockchain-based competitions. Unlike most of the new NFT projects, Lucky Block isn't limited to one single collection; it releases a new series of NFTs regularly.

When an NFT collection is sold out, the smart contract randomly selects a winner from those who purchased an NFT and entered the competition. These competitions are held weekly, and the rewards range from game consoles to supercars.

Moreover, those who hold Lucky Block NFTs are also offered rewards in LBLOCK, the native token of Lucky Block. The longer users hold the NFT, the more tokens they receive.

Although Lucky Block does not ‘technically’ support NFT staking, it incentivises users to hold their NFTs for the long term.

Quint

Quint is one of the unique platforms launched in recent years. It offers notable features, including a super staking pool, an NFT marketplace, and the Quint shop. The super staking pool is what differentiates this project from the rest.

While ordinary NFT staking pools offer tokens as staking rewards, the Quint staking pool also offers real-world experiences as rewards. These can range from stays in popular travel destinations and supercar experiences to discounts on hotel bookings, restaurants, and much more.

In addition, Quint also offers luxury raffle pools, which reward participants with exclusive APYs. To enter, investors can buy NFTs via the platform’s marketplace. Quint is focused on offering luxury and exclusive NFT services. For example, investors can get their minted NFTs framed and delivered to their doorsteps.

Mutant Cats

Mutant Cats is one of the first crypto projects that purchase and utilise NFTs from popular, successful collections. These NFTs are held in the Mutant DAO vault, including CryptoPunks, BAYC, and Tyler Hobbs.

In addition, Mutant Cats has also launched its native NFT collection of 9,999 NFTs that feature cat avatars, as the name suggests. Mutant Cat NFTs can be staked to earn the rewards in the form of the native token of this project, the FISH token.

Doge Capital

Doge Capital is another NFT project with its own exclusive collection of NFTs, which consists of 5,000 NFTs, each depicting a 24×24 artwork. Similar to the Mutant DAO, Doge Capital also has a treasury that secures its investment in other popular NFTs. The vault is known as Woofbank and stores these popular NFTs for its community.

In addition, Doge Capital allows investors to stake Doge Capital NFTs and rewards them with DAWG tokens.

ZooKeeper

ZooKeeper is an NFT staking platform that could be suitable for long-term investments. Investors are encouraged to stake their NFTs to provide liquidity to the ZooEcosystem, and in return, they are rewarded with ZOO tokens.

ZOO tokens can be utilised across the ZooEcosystem, which consists of an NFT crafting centre, an NFT marketplace, and a P2E game.

Having taken a look at the top 10 NFT projects that offer staking for their native NFTs, let’s look at other NFT staking platforms that don’t offer NFTs of their own. These platforms are more of a place to stake your individual NFTs.

The Best NFT Staking Platforms

Unlike the platforms mentioned above, the NFT staking platforms introduced in this section are NFT-agnostic, meaning you can stake non-native NFTs on these platforms. The best NFT staking platforms in 2023 are as follows:

  • WhenStaking: Onessus’ NFT staking protocol allows NFT staking for Onessus’ NFTs and its partners/ collabs.
  • NFTX: A platform for creating markets for illiquid NFTs.
  • LooksRare: A community-driven marketplace for NFTs based on Ethereum.
  • Binance NFT PowerStation: Binance’s fan token feature allows devoted fans to earn rewards with supported NFTs.

These platforms are considered the best NFT staking platforms because they offer high APYs, staking flexibility, and community features, while also being secure.

Is Staking NFT Worth It?

Although the concept of NFTs is still fairly new, and NFTs have a long way to go to reach the level of mass adoption they deserve, a lot of new NFT staking opportunities are being presented each day.

If you’re holding NFTs as a long-term investment and don’t intend to sell them anytime soon, staking NFTs is a great way to put your NFTs to use and generate extra passive income.

Summary

NFT staking refers to the process of locking up your NFT in a blockchain platform to earn staking rewards as passive income. Other than earning rewards, NFT staking grants users membership privileges such as voting rights in the DAO.

However, there are risks of rug pulls, and the crypto price volatility can also affect the NFT staking process. Each platform offers a different APY based on your NFTs value and rarity and has a different lock-up period that can range from days to years. To find the best crypto projects and set the best portfolio, check Cryptologist.

FAQ

Congrats! You’ve made it this far, learned about the concept of NFT staking, and discovered various NFT staking platforms and their unique features. Let’s answer some FAQs to deepen your knowledge even more.

How Long Can You Stake An NFT?

NFT staking lock-up periods can range anywhere between days to years.

Is Staking Good For A NFT?

Instead of holding your NFT while it remains idle, you can put your NFT to use by staking it and making a new passive income stream.

Where Can I Stake My NFT?

You can stake your NFTs on NFT staking platforms, such as Binance, NFTS, WhenStaking, and LooksRare.

Is It Safe To Stake Your NFT?

Although most NFT staking platforms are considered safe and secure, there is always the possibility of hacks and attacks. Also, another risk associated with NFT staking is rug pulls.

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