NFT staking is a way for NFT holders to unlock value from their NFTs by locking them up on a platform/protocol to earn rewards.

Such rewards include receiving tokens (could be for the purposes of use in games, utility within the project's ecosystem, project governance, passive income, etc.), NFT airdrops, whitelist spots and more.

Staking is often offered as an incentive for holders to hold onto their NFTs and not list them. Less NFTs listed means less selling pressure, and hence a higher floor price for the collection.

Staking programs and mechanics can be quite technical, but some of the key things to pay close attention to are:

  • whether the staking contract is custodial or non-custodial, meaning whether the NFTs are taken out of your wallet to be staked or can remain in your wallet throughout the staking duration, respectively.

  • Lock-up period / staking duration, basically how long your NFT will need to be staked for.

  • APY (annual percentage yield), which applies only when staking for passive income. It refers to the how much the total value of your staking rewards (at current token prices) would be after accumulating over the course of a year, divided by the value of the staked NFT.

It is important to note that there have been and continues to be debate in the NFT space regarding potential regulatory concerns over passive income received in NFT projects, as such NFTs could potentially be perceived as securities.

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