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How To Earn Passive Income With NFT

June 15, 2022

NFTs offer multiple ways of earning passive income. Read on to discover the best ways to earn passive income with NFT.

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Everyone enjoys making money without having to work for it, which is why investors are
constantly on the lookout for stocks, real-estate and other passive income opportunities.
Cryptocurrencies enabled speculators to earn massive returns, and now NFTs have emerged as
a major source of passive income in the Crypto world. Here are 5 majors ways of earning
passive income with NFTs:

NFT Royalties

One of the main advantages of NFTs that have gotten people excited is the possibility for artists
to monetize their work through royalties. NFT smart contracts mean the original creator of an
NFT can earn passive income from future sales based on a royalty percentage
decided when
the NFT was originally minted. If an NFT, or a collection of NFTs, is popular, it may resell
multiple times for large sums, earning artists or a team of creators a nice passive income
with which to pursue future projects.

Staking

Staking an NFT is similar to staking a cryptocurrency. The owner must lock their NFT into a
blockchain network, and receive a return in the form of a cryptocurrency token as a reward. The
token can hold value if it’s part of a larger ecosystem, for example, a gaming platform. tokens
can then be swapped for other cryptocurrencies based on their market value. But some tokens
turn out to be useless and devalued over time. So some research into the project is necessary to
avoid pyramid schemes.

Renting

Blockchain and play-to-earn games are an extremely popular niche of NFT sales. Rare NFTs
can offer significant in-game advantages for holders. Some gamers who can’t afford to own
certain NFTs will rent them instead for the advantages they offer. This method was particularly
popular when Axie Infinity, one of the most popular play-to-earn games, was at its peak. NFT
renting is also gaining traction in the metaverse, where owners of hot location in certain
metaverses are renting out spaces just like real-estate is rented in the real world.

Liquidity pool

Liquidity pools are collections of tokens locked into a smart contract by multiple investors, with a
self-executing program based on an agreement between buyer and seller. This enables a
smooth decentralized exchange platform. Liquidity investors receive interest in the form of
tokens based on a trading fee, for every trade other investors make in the pool. Now NFTs can
provide a form of liquidity for such pools, with returns even calculated based on the rarity of the

NFT. A reverse example is placing cryptocurrency in the liquidity pool and receiving interest in
the form of an NFT

Yield farming

Yield farming is the process of leveraging return on one decentralized platform and investing it
in another. So investors will loan or stake coins on an exchange, and then move the returns
elsewhere. NFTs are now a part of that process for savvy investors who move their assets
between cryptocurrency and NFT platforms.

Conclusion

While most people think of royalties NFT creators make from secondary sales as the
obvious way to make passive income from NFTs, as we've seen, there are several other
ways to do so. But passive income schemes like staking or yield farming, don't
guarantee a return, so like any investment, it's important to do proper research to find
solid projects that can create passive income from NFTs.

FAQ's

How do people make money from NFTs?

There are several ways. One is to buy or mint an NFT and then sell it for a higher price. But to
make passive income requires creating a successful collection and earning royalties, or one of
the other methods mentioned in this article.

Are NFTs passive income?

There are several different ways of making money with NFTs, including passive income
opportunities.

Can NFTs be converted to money?

Yes. You can sell an NFT for a cryptocurrency and then convert that crypto to cash. Some
websites even enable selling an NFT for regular currency by taking care of the conversion in the
transaction.