Non-fungible tokens (NFTs) have grown to become THE sector in the cryptoverse. In 2021, the sales of NFTs hit $23 billion, from a total sales of $340 million in 2020 – evidence of just how fast the sector is growing. And it’s not showing any signs of slowing down, with new innovations like Play2Earn (P2E) gaming and the “Metaverse” opening exciting new use cases for these pricey JPEGs.
If you are new to crypto, NFTs are digital collectibles stored on the blockchain. Each NFT possesses unique cryptography, meaning that they are one-of-a-kind digital assets that can be owned by only one person at a time. They cannot be duplicated or divided.
The popularity and adoption of non-fungible tokens are increasing because they allow artists and content creators to generate revenues while retaining their full copyright. In addition, because no two NFTs are the same, their values increase, allowing holders to trade them based on their perceived worth.
These reasons are why the sales of NFTs have been predicted to more than double in 2022. So, you’re not late for the party. The question remains though, how can you make money off non-fungible tokens?
Well here are seven hot methods of “minting it” with NFTs, by monetizing them and earning passive income.
8 Ways to Earn Money with Your NFTs
1. NFT Staking
In crypto, staking refers to participating in transaction validation on a network by storing digital assets in the form of a “stake,” which is then used to help validate the next block on the chain with a consensus algorithm. In return for joining in the staking pool, participants receive a share of the validation reward.
Because NFTs use Ethereum’s ERC-721 standard, which allows them to interact with decentralized finance (DeFi) protocols, they can also be staked. While some platforms allow users to stake their NFTs to earn rewards and incentives, most require you to purchase their native tokens to qualify. NFT holders can earn token rewards for staking on Splinterlands, R-Planet, Kira Network, and NFTX.
2. Borrowing and Lending NFTs
The concept of borrowing and lending NFTs was made popular by the blockchain P2E game Axie Infinity. In the game, people can loan out their high-demand NFTs to new players in return for a percentage of their wins.
Gamers without these NFTs can also “borrow” them to boost their chances of winning. While receiving win bonuses, which are mostly in the native tokens of the P2E game, users hand over a small percentage of their earnings to the lender.
Borrowing and lending NFTs has taken off in popularity in the past year
Because of the unique nature of NFTs, the owner retains complete autonomy and ownership over these assets. In some cases, they may determine their own terms of service, such as the duration of the loan, for the borrower.
3. NFT Farming
As blockchains become more interconnected, we have seen non-fungible tokens become integrated into decentralized finance. The concept of NFT farming involves providing liquidity with your coins – a use of DeFi – in return for NFTs.
For example, by providing liquidity for the automated market makers (AMM) that undergird the ecosystems of Bunicorn, Uniswap, or MOBOX, you can get time-locked rewards wrapped into tradable NFTs.
When stacked on each other using certain platforms, these NFTs increase the mining power of their holders.
4. NFTs and P2E Gaming
With the arrival of P2E, games have become one of the more active means of making money from non-fungible tokens. While some games reward players with their native tokens, others do so in NFTs.
Screenshot from P2E game Farmers World.
P2E games have functions that allow buying, selling, trading, and exchanging NFTs. Gods Unchained, Splinterlands, Farmers World, Chainmonsters, Axie Infinity Scholarship, and Coin Hunt World rank among the most popular.
5. Licensed Collectibles
Since NFTs have provable rarity, tokenizing them to physical items has become one of the most popular applications of the technology. In addition, while the physical item can be damaged or lost, NFTs can be securely stored on the blockchain, where their quality will never deteriorate.
Rare physical items, like trading cards, are now being converted to NFTs and auctioned online. Sports cards are currently the most popular type of collectibles. If you have rare collectibles, chances are that you can convert them to NFTs and monetize them.
6. Flipping NFTs
This is one of the most popular ways of making money with NFTs. Like with other assets, flipping NFTs involves buying them at lower prices and selling them at higher ones, either short or long term. Investors who go down this route usually seek short-term profits.
Speculators purchase NFTs based on research, engage with the community where the NFT was traded, and attempt to sell the goods for gains. Flipping is also a much more active approach to earning money than staking and providing liquidity, with higher risks and rewards as well.
7. Create Your Own NFT
Designing and selling your own NFT on the marketplace is still a viable option too. While the most common use cases are for digital art, music, or writing, other things like domain names can also be minted as NFTs, so you shouldn’t worry if you don’t happen to be Andy Warhol.
Some of the highest-selling NFTs have been pixel art like CryptoPunks – meaning just about anyone can create one. In addition, the cryptographic nature of the asset ensures that wherever it’s sold, the creative rights can be traced back to you.
8. NFT Airdrops
These should be considered as a bonus but are still worth paying attention to. Most new NFT projects start by randomly giving away tokens to their community as airdrops, so it pays to become engaged in the space.
Airdrops – when tokens literally just land in your wallet.
With hundreds of NFT projects popping up every week, one would need to invest a lot of time following them to get the right airdrops. Most new projects use Twitter and Discord as their preferred social media platforms for community members.
NFTs and the Future of Digital Art
Thanks to the Internet, for decades, digital art has been endlessly copied and downloaded by billions of people without any form of licensing whatsoever. However, NFTs have improved that situation for creators and collectors, as their unique cryptography can function as a certificate of authenticity or ownership.
Starting with JPEGs, NFTs have found use cases in the music, sports, online gaming, real estate, and fashion industries. With new use cases emerging all the time, the asset class appears poised for continued development.
This article is for educational and entertainment purposes only and reflects only the opinions of the author, not CoolBitX or CoolWallet. No part of this article should be construed as financial advice.