The non-fungible token (NFT) market has emerged as one of the major sectors in the crypto industry in 2021, with the total amount spent on purchasing NFTs surpassing $12.6 billion, up from $162.4 million at the start of the year.
Although a vast majority of NFTs are created, bought and sold using Ethereum, sending these tokens requires high gas fees which could be incredibly expensive.
Data from Raribleanalytics estimates minting a single NFT on Ethereum costs around $98.69 in gas fees while minting NFT collections will put you out of pocket by $900, on average.
To make up for these costs, many investors and creators simply try to offload their NFTs on secondary marketplaces, such as OpenSea, and bank a profit.
But there are a number of ways to generate an income from NFTs than selling them at a higher price than you paid or created them for.
It’s noteworthy that NFTs do not store the digital item they represent. Instead, they simply point to the file’s location which exists somewhere else on the internet.
Because no two items represented by NFTs are ever the same, it means NFTs cannot be traded in pairs.
This is why they’re called “non-fungible” tokens.
Here Are Some Simple Ways to generate passive income from NFTs
- Rent out NFTsOne way you can earn passive income is to rent out your NFTs, particularly those in high demand.For instance, some card trading games allow players to borrow NFT cards to boost their chances of winning. As expected, the terms governing the deal between the two parties involved are governed by smart contracts. Therefore, NFT users usually have the freedom to set their preferred duration of the rental agreement and the lease rate for the NFT.
- Stake NFTs: One of the benefits of the marriage between NFTs and decentralized finance (DeFi) protocols is the possibility of staking NFTs. Staking refers to the process of depositing, or “locking away,” digital assets into a DeFi protocol smart contract to generate a yield. While some platforms support a wide range of NFTs, others require you to purchase native NFTs in order to earn staking token rewards (also usually denominates in the platform’s native utility token.)