4 Brilliant Ways To Make Money With NFT
Is the thought of making money with NFTs intriguing you? Well, we can help you with it. This article will list 4 exciting ways of earning money through NFTs.
How do you make money off NFTs?
First of all, selling crypto-assets is a fundamental means to make money with NFTs. This is the most standard way that NFT creators employ. Usually, people think that selling or reselling is the ONLY way to make money with NFTs. However, that is not the case; selling NFTs is just one of the methods to make money off NFTs.
For starters, NFTs are decentralized in nature and digitally represent an asset, such as videos, art, music, etc. The tokens are treated as assets/properties as they possess a string value.
So these assets can be monetized depending on the value it generates. Before listing out the various ways of making money with NFTs, go through some common ways to monetize NFTs below.
NFTs are typically sold in marketplaces, with different processes depending on the platform. However, the process is similar to the one employed on Amazon. In case you already own a digital content portfolio; here’s what you can do next:
- Sell the NFTs in a marketplace
- Trade the NFTs
Sell your NFTs:
In orderto sell NFTs, you must:
- Choose a marketplace,
- Connect your wallet to it, and
- Mint the NFT.
There are numerous NFT marketplaces that you can find online. You can go through each of them and select the one that suits your interest the best.
Once an NFT platform is selected, you must link it with your crypto wallet. “Mint” the NFT in the next step, after establishing contact between your wallet and the marketplace.
Minting is nothing but the process of changing or creating a digital file into a digital (crypto) asset or crypto collectible on the blockchain. You don’t need to worry about minting since most marketplaces guide you through the minting process on their platform.
Once you create NFTs, upload your digital file as per the instructions laid out on the platform. Since each platform/marketplace has its own set of procedures, you need to follow them to complete the processes successfully. So, after uploading the file, you can put it up for sale.
The marketplace will calculate “gas fees” after your file is put up for sale. Gas fees are nothing but the cost charged by the blockchain network to record transactions. The cost is usually determined by how busy the network is. Depending on the marketplace, the best method to reduce these fees is to list your asset during non-peak hours.
Trade the NFTs:
One of the misconceptions about selling NFTs is that people think the option is available to NFT creators alone. However, the truth is that selling NFTs is not just limited to creators, and even buyers can gain profits. NFTs, similar to stocks, can be used by investors to gain profit through purchasing and selling them.
Suppose you are a buyer who bought an NFT that you no longer require. You can sell them off without hassles, just like the original creator does. Since the NFT is getting sold for a second time, there is no need to mint the coins. This is how NFT investors do trading.
Knowing when to sell NFTs is critical to successful NFT trading. Typically, the optimal moment to sell an NFT is determined by:
- The type of NFT
- The reason for its purchase
- The value and interest that it creates
You can easily discern these factors with the help of quick internet and NFT marketplace research.
These are the primary ways to earn money through NFTs. However, as we said earlier, these are not the only ways to monetize your crypto assets. In the next section, let’s dive into the other ways of earning passive income from NFTs.
List of ways to earn income through NFTs
After listing digital assets on a marketplace, there are numerous ways to make passive income. The following are a few ways that you can try:
One of the methods of earning passive income is by renting out NFTs. Renting or lending NFTs usually works great for those NFTs that are in high demand. Card trading game is one example of renting out NFTs where players (users) rent or borrow NFT cards to enhance their chances of winning.
The option is supported by smart contracts, which manage the arrangement between the parties involved. Typically, NFT users have the option of determining the length of the rental agreement and the lease rate for their NFT. Additionally, some platforms enable lenders to set daily rates.
ReNFT is one of the projects (platforms) that facilitate users to rent NFTs instead of buying them. This helps users to test the NFT before actually purchasing them.
For example, if someone wants to play an NFT game but isn’t sure if the investment is worthwhile, they can first rent an NFT to test the waters.
However, to rent an NFT, the borrower must offer collateral, usually in the form of commonly accepted crypto-like stablecoins or ETH. In many cases, overcollaterization is required, forcing the borrower to lock in more upfront capital than the value of the NFT itself.
Although collateralization is a solid insurance strategy, it still limits who can borrow due to the significant money necessary to borrow NFTs, particularly those on the more expensive side. When you require the NFT for a short period, renting a pricey NFT makes sense.
This is another popular way to earn income for NFT creators. Royalties are rewards or payments that a creator gets whenever their NFT is sold on a secondary market. A certain percentage of the secondary sale price will be paid, and usually, a basic royalty rate of 5-10% is preferred.
NFT royalty payments are permanent and are executed automatically using smart contracts. Usually, creators set up fixed percentages when the NFTs are being minted. Smart contracts are used to execute the contractual agreements and regulate the entire royalty distribution process.
Thus, you won’t have to manually enforce your royalty terms or track payment as a creator as the process is automated.
NFT staking is the process of depositing or locking away non-fungible tokens on a staking platform or protocol to earn rewards. In fact, staking is a vital function that processes transactions and helps a blockchain stay secure. This NFT mechanism allows users to safeguard the blockchain network and receive incentives in exchange for their efforts.
Users can earn passive income by staking NFT tokens as an asset. Furthermore, NFT staking gives NFT owners liquidity. Staking rewards are based on various factors, including the asset’s potential to generate passive revenue, such as royalties.
While NFT staking is a great option to earn money, certain staking partners may force you to lock up your bitcoin for a period to participate. Furthermore, hacking is another potential threat that can affect an NFT platform and endanger the interests of the creators.
NFT-powered yield farming
Yield farming, also known as liquidity mining or NFT Farming, has become quite popular since mid-2020. It is the process of earning yield or returns on crypto assets (NFTs) by locking them away as stakes in a DeFi trading or lending pool to operate as a liquidity provider.
It is an investment strategy in DeFi and involves staking or lending tokens to receive rewards. The reward can be transaction fees or interest. This is akin to earning interest on a bank account, where, theoretically, you are lending money to the bank.
Firstly, the users who lend their cryptocurrencies to the DeFi platform’s operation are known as liquidity providers or simply LP. These LPs contribute their coins or tokens to a liquidity pool, which is nothing but a smart contract-based decentralized application (dApp) that contains all the funds.
When an LP lends their tokens to a liquidity pool, they are paid a fee or interest created by the underlying DeFi platform where the liquidity pool is running. It must be noted that there are no intermediaries involved as it is done through smart contracts.
The liquidity pool is the driving force behind a marketplace where anyone may lend or borrow tokens. Users are charged fees for using these marketplaces, which are used to compensate liquidity providers for staking their tokens in the pool.
The majority of yield farming occurs on the Ethereum platform. As a result, the incentives are in the form of an ERC-20 token.
Similar to the case of NFT staking, yield farming is concerned about cyber theft and fraud, which are two key concerns where farming is concerned. This is in addition to the regulatory dangers that most digital assets face due to a global absence of formal regulations governing cryptocurrencies. Furthermore, historically, cryptocurrency prices have been erratic, which needs to be monitored.
These are some ways to earn money with NFTs. However, you must remember that NFTs and smart contract technology is still new; they are still in their infancy. Thus, you can expect changes and innovations in the future. Moreover, you can also expect changes in policies governing NFTs.
As a result, it is advisable to undertake a thorough study and comprehend its risks to make an informed decision.
Whether you wish to learn about NFT, Blockchain, Web3.0, Metaverse, or other emerging technologies, we have the vital resources that will enlighten and help you make an informed decision.
Subscribe to UPYO Blog Newsletter to deliver emerging technology updates straight to your inbox.