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The goal of investing is to create wealth and one of the best ways to do this is by earning passive income. In simple terms, passive income means making your money work for you by investing in assets like NFTs.
Surprised to hear NFTs and passive income in the same sentence? You aren’t alone. While all the headlines are about NFTs selling like hotcakes, NFT trade isn’t the only way to earn returns.
Truth is, blockchain-based assets like NFTs can in fact fetch you passive income in more than just one way, with certain principles borrowed from traditional assets like bank deposits and real estate.
In this blog, we’ll explain the top 5 ways to earn passive income from NFTs. Let’s start off with a refresher on NFTs for those who are new and move on to how passive income from NFTs works. You can consult a Cube Wealth coach or download the Cube Wealth App.
An NFT or Non-Fungible Token is a unique and one-of-a-kind way to own digital assets like art, music, literature, or even Tweets! What makes NFTs valuable is their irreplaceable nature.
For example, you can trade one Bitcoin for another and you’ll get the exact same thing - a Bitcoin. You can’t trade one NFT for another and get the same NFT - they’ll be different.
Most popular NFTs like the Bored Ape Yacht Club collection are a part of the Ethereum blockchain. As a result, ETH, which is a token native to Ethereum, is used for payment and fees. You can consult a Cube Wealth coach or download the Cube Wealth App.
Furthermore, NFTs are assets which means that they have a value that can rise or fall based on some parameter, which is mostly what another person is willing to pay for it à la a piece of art or a footballer’s value.
NFT trade is thus a popular way to turn a profit. In fact, certain NFTs have sold for as high as $69.3 million. That said, NFT trade is costly because of the significantly high gas fees that Ethereum charges.
That’s why many DeFi platforms offer multiple ways to earn passive income from NFTs with paradigms like renting, staking, yield farming, and more.
Staking simply means locking or depositing your NFTs to earn passive income. The yield that’s generated through staking is generally known to be distributed in the form of tokens.
Some DeFi platforms require users to purchase their native NFTs for staking and hand out rewards in the form of governance tokens that bestow voting rights.
There are several GameFi platforms that allow NFT owners to earn passive income by renting out their digital assets to NFT gamers within the ecosystem. These renting deals are governed by smart contracts.
While NFT owners can set the lending rate and duration, many platforms have an upper limit on both. This space is, as you can tell, an evolving concept with a lot of future potential.
NFTs have been one of the most important pillars of the creator led economy that Web 3.0 is building towards. A case in point is the fact that NFT creators can earn royalties even after they’ve sold their art.
Passive income is generated by the royalty fees whenever the creator’s NFT is traded in the secondary market. These royalties are decided by the NFT creator themselves.
The fun part? This whole process of earning passive income from NFTs is automated as transactions on the blockchain are governed by smart contracts that have pre-fed royalty data filled by NFT creators.
Multiple platforms are known to reward users who provide liquidity with NFTs in return. This NFT reward can be sold by the owner to exit the liquidity pool quickly.
A liquidity pool is nothing but a collection of digital assets locked in a smart contract that’s pledged by multiple investors. The locked pool of assets can be used by the platform for handing out loans.
Yield farming with NFTs is a method where investors look to earn returns on top of returns by leveraging yields earned from one platform and investing them in another through methods like staking. You can consult a Cube Wealth coach or download the Cube Wealth App.
Earning passive income from NFTs is possible through staking where the NFT is locked or deposited for a certain period of time in exchange for yields that are paid in tokens or other digital assets.
Other ways to earn passive income from NFTs include royalty fees that creators embed in the smart contract while minting the NFT; renting out NFTs to gaming platforms or locking it in liquidity pools to earn rewards.
NFTs have been known to generate income for investors through mediums like trade where one NFT is sold in return for cryptocurrencies. Other methods include generating passive income from NFTs by:
Ans. NFTs are non-fungible tokens representing ownership of unique digital assets. You can earn passive income from NFTs through activities like renting, staking, lending, and royalties from sales.
Ans. Platforms like Rarible, OpenSea, and specialized DeFi protocols offer various opportunities for passive income, such as yield farming and NFT collateralized loans.
Earning passive income from NFTs in 2023 offers a unique opportunity for investors and collectors to make their digital assets work for them. NFTs have evolved beyond simple ownership to enable various income-generating activities, such as renting, staking, lending, and royalties from sales.
Note: Facts & figures are true as of 17-01-2022. None of the information shared here is to be construed as investment advice. Exercise caution when investing in unregulated assets like cryptocurrency.
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