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NFT Staking: How to Get Started in 2024

NFT Staking: How to Get Started in 2024
NFT Staking: How to Get Started in 2024
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  • NFT staking allows you to earn a passive income in exchange for locking up your NFTs for a set amount of time. 
  • NFT staking is relatively new — but can be a good option to earn a passive income if you’re planning to hold your NFTs for the long-term!

NFT staking allows you to earn rewards from your digital collectibles — allowing you to easily earn a passive income!

In this guide, we’ll break down everything you need to know about getting started with NFT staking — including how NFT staking works and the best platforms to earn rewards in 2024!

What is staking? 

NFT staking for passive income

In cryptocurrency, staking generally refers to locking up your cryptocurrency with a specific blockchain or protocol to earn rewards. Proof of Stake blockchains like Ethereum use staking to validate transactions and help ensure the security of the blockchain.

Similarly, NFT staking allows NFT holders to earn passive income by locking up their assets. Instead of holding your NFTs in your wallet, you can earn rewards by locking up your NFTs in a NFT staking platform. 

Typically, NFT staking rewards come in the form of cryptocurrency — but can also take the form of access to a whitelist or future NFT mints. 

Is NFT staking worth it? 

NFT staking risks and benefits

NFT staking is considered new and somewhat risky. At this time, trusted exchanges like Coinbase and Kraken don’t offer NFT staking — meaning that investors need to turn to lesser-known platforms to earn rewards. 

While it may be worth it for investors who already hold NFTs they are planning to hold long-term, it may not be a good idea to buy NFTs for staking purposes.

What rewards do I get from staking my NFTs? 

Typically, you’ll receive cryptocurrency rewards for staking your NFTs. Depending on the NFT platform you choose, you may receive your crypto on a daily or weekly basis. 

Some NFT projects may offer additional rewards for NFT staking. For example, you may receive access to future NFT mints or the ability to buy an NFT at a discounted price! 

How does NFT staking work? 

How does NFT staking work?

Typically, there are two ways to stake NFTs: through staking platforms or through the project itself.

How do staking platforms work? 

Typically, NFTs are highly illiquid. This presents a problem for traders and investors who wish to speculate on NFT collections. While they may want to invest in the success of a project, there may be no NFTs available for them to buy. 

Platforms like NFTX have helped to solve this problem by giving users access to NFT vault tokens — which give investors the ability to buy, sell, and trade tokens that are backed by NFTs from the collections they represent. 

To incentivize NFT holders to store their assets in an NFTX vault, the platform offers staking rewards. NFT stakers are entitled to 100% of the transaction fees from each vault. 

Why do NFT projects offer staking? 

Certain NFT projects offer the ability for investors to stake their NFTs and earn rewards. 

This can be a great way to offer additional rewards to investors and incentivize owners to hold their NFTs for the long-term. Because staked NFTs cannot be sold until they are un-staked, this can help the NFT collection maintain value.

How are NFT staking rewards calculated? 

Typically, NFT staking rewards are determined based on multiple factors, including: 

  • Duration: Typically, you will earn more rewards if you commit to staking your NFTs for a longer period of time.
  • NFT rarity: The rarer the NFT you are staking, the higher rewards you’ll earn in most cases. 
  • Total staked value: The total value of the NFTs you stake may impact your reward rate.

Should I stake my NFTs? 

Here are a few things to keep in mind before you get started with NFT staking. 

See the APYs you’ll get from your NFT 

If you’re planning on holding your NFTs for the long-term, NFT staking can be a great way to earn passive income on your existing assets. Take a look at the APY that you can get from staking your NFT to determine whether it would be a good decision for you. 

Be wary of APYs  that feel too good to be true. It’s possible that the reward rate will decrease in the future. 

Understand risks associated with your platform 

In recent years, the cryptocurrency ecosystem has seen bankruptcies from well-known platforms like BlockFi and FTX. Remember to do research on your NFT staking platform before locking up your NFTs. 

Account for NFT lock-in period

Before you get started with NFT staking, understand the lock-in period for your assets. 

Unlike cryptocurrencies, NFTs often have low liquidity — which means it can be difficult to exchange them for cash. As a result, a long lock-in period can be disastrous if you wish to trade away your NFTs during a market downturn. 

Look at NFT/crypto volatility 

Before you stake your NFTs, you should understand the price action of both the associated collection and the underlying cryptocurrency (typically Ethereum).

If your NFT collection has seen price volatility in the short-term, it’s possible that the value of your assets could fall greatly. 

In addition, it’s important to keep in mind that the value of the underlying crypto can impact the price of your NFTs. Because NFTs are priced in cryptocurrency, the value of your NFT can decline in the case of a crypto market crash. 

Can my NFT be staked? 

It’s important to remember that not every NFT can be staked. Many projects do not offer staking rewards to users. 

What are the benefits of NFT staking? 

Earn passive income on your NFTs 

Instead of simply passively holding your NFTs, staking allows you to earn rewards on your assets. 

Earn governance tokens 

Some NFT projects offer governance tokens in exchange for staking — which can give you a voice in the future of the NFT project! 

For example, staking a Bored Ape Yacht Club NFT gives investors access to ApeCoin — a cryptocurrency that gives access to the decision making process over the future of the project through the ApeCoin DAO! 

Get access to future NFTs 

Some projects offer access to a ‘whitelist’ for NFT stakers. This is a list that gives your wallet address access to future NFT mints — which can potentially be a lucrative opportunity depending on the project’s success.

What are the risks of NFT staking? 

Potential losses

It’s important to remember that NFT staking — especially with a non-reputable platform — comes with significant risks. The NFT world is infamous for theft, hacks, and scams

It’s important to do research on your NFT and your NFT staking platform to minimize the risk of potential losses. 

Lock-in period 

Some platforms require long lock-in periods if you wish to stake your NFTs. This can be an issue if you wish to sell your assets in the near future. 

Price fluctuations 

The NFT market is incredibly volatile — which means that NFTs can lose significant value in relatively short spans of time. This may present an issue if you are staking your NFTs and cannot sell your assets. 

What platforms can I use to stake NFTs? 

Wondering where you can stake your NFTs? Let’s walk through a few popular platforms. 

NFTX: NFTX is one of the world’s biggest platforms for NFT staking. You can get started staking your NFTs today — or trading tokens that represent the world’s biggest NFT collections! However, it’s important to note that once you stake an NFT with NFTX, you lose ownership over that specific NFT. For example, if you stake BAYC #101 with NFTX, you’ll receive a different BAYC when you choose to un-stake. 

Binance NFT PowerStation: Binance NFT Powerstation is a partnership between Binance and sports teams from around the world. By buying and staking a team-related NFT, you can earn fan tokens which provide benefits — including priority ticket sales and the ability to influence key team decisions! 

Bored Ape Yacht Club: If you own a Bored Ape Yacht Club, Mutant Ape Yacht Club, or Bored Ape Kennel Club NFT, you can stake your NFT on https://apestake.io/ to earn Ape Coin! 

Crypto games: Crypto games like Axie Infinity and Splinterlands give users the ability to stake NFTs for additional rewards!

Is NFT staking a good investment? 

Ultimately, what qualifies as a ‘good investment’ is dependent on the return you are seeking and the risk appetite you are willing to take on. 

It’s important to remember that NFT staking is a relatively new concept — so it’s possible that staking your NFTs comes with risks. However, it may be a good option for investors who wish to hold their NFTs for the long-term and are willing to take on potential risks. 

Is NFT staking subject to tax?

NFT staking tax

Similar to other digital assets, buying, selling, or generating income from NFTs has tax implications.

If you use cryptocurrency (like ETH) to purchase an NFT, this is treated as a disposal of your ETH, and you will incur a capital gain or loss depending on how the value of your ETH has changed since you originally acquired it. Similarly, when you eventually sell your NFT, you will incur a capital gain or loss which needs to be reported on your taxes.

If you earn staking rewards from your NFT, those rewards will be taxed as ordinary income at the fair market value of the cryptocurrency at the time it is received.

For a complete breakdown on the tax implications of NFTs, check out our complete NFT tax guide.

Frequently asked questions

  • Can you stake an NFT?
  • What is the best platform for staking NFTs?
  • What does it mean to stake an NFT?
  • Does staking an NFT cost gas?
  • How can I stake an NFT on OpenSea?
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