The rapid development of the currency circle has given birth to a variety of asset appreciation methods, and NFT pledge is one of the emerging models. It combines the uniqueness of non-fungible tokens (NFTs) with the concept of staking in traditional finance.

Simply put, NFT staking allows users to lock the NFT they hold onto a specific platform or protocol to obtain corresponding rewards. This is similar to the PoS (Proof of Stake) pledge of cryptocurrencies, both by locking assets to support the operation of the network or protocol and obtaining profits. However, the non-homogenized nature of NFTs makes its staking mechanism different from the homogenized tokens, and each NFT may represent a unique value or equity.

By participating in NFT staking, holders have the opportunity to bring additional streams of earnings to their digital assets without selling their NFTs. This opens up new avenues for the practicality of NFTs, making them more than just collectibles or artworks.

What are the basic principles of NFT staking?

1. NFT staking is a process of locking your non-fungible tokens into a smart contract.

2. By locking in NFTs, you provide some form of support or participation to a specific platform or protocol.

3. In return for providing this support, the platform will distribute rewards to you based on preset rules.

4. During the staking period, you are usually unable to trade or transfer locked NFTs.

How to obtain passive income through NFT staking?

1. Obtain platform native tokens as rewards. Many NFT staking platforms distribute their own platform tokens to stakers.

2. Get other types of cryptocurrencies. Some protocols may pay rewards in the form of Ethereum, stablecoins, or other mainstream cryptocurrencies.

3. Receive additional NFT or digital assets. Some projects reward pledgeers with new, rare NFTs or in-game items.

4. Enjoy the agreement income sharing. Some pledge agreements may distribute a portion of transaction fees or income generated by the platform to the pledger.

5. Obtain platform governance rights or special rights. Pledge NFT may be accompanied by the right to participate in platform decision-making voting or enjoy community privileges.

Considerations that may be faced when participating in NFT staking

1. The risk of value fluctuations of NFT itself. If the market value of your pledged NFTs falls, the pledge income may not be enough to compensate for potential asset losses.

2. Platform smart contract risk. If there is a smart contract vulnerability on the staking platform, it may lead to the loss of the staking NFT.

3. Uncertainty in agreement rewards. The value or frequency of the award may vary with market conditions or agreement policies.

4. Liquidity locking during pledge period. NFTs cannot be freely bought and sold during the pledge period, and market opportunities may be missed.

5. The reputation and sustainability of the platform. It is crucial to choose a pledge platform that operates well and has a reliable reputation.

Common NFT staking modes

1. General pledge pool based on NFT series. Some projects allow users who hold a specific NFT series to pledge them to a unified pool and allocate rewards based on the number of pledged or rarity.

2. In-game assets pledge. In blockchain games, players may be able to pledge NFTs in the game (such as land, characters, equipment) to obtain game tokens or resources.

3. Virtual real estate pledge. Players holding the Land NFT of the Virtual World can obtain the native tokens of the Virtual World through pledge.

4. Empower pledge works of art or collectibles. Some art NFT platforms or projects are exploring models to obtain community rewards or curatorial rights by pledging art NFTs.

5. A staking agreement combining DeFi and NFT. A model has emerged that allows users to pledge NFTs to borrow or use NFTs as liquidity mining vouchers.

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