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5 Ways That NFTs can Earn Passive Income For You: Passive Income Nft Projects


5 Ways That NFTs can Earn Passive Income For You
pic credit: coin desk


NFTs have the potential to create a huge amount of passive income. Holders of CyberKongz were recently making $900 per day by holding a single NFT. These NFTs are now, of course, quite expensive. They were, however, initially valued at 0.1 ETH each, or a few hundred dollars. That is the price point at which you should enter. 


So, here's how it's going to go: I'm going to show you 5 ways that NFTs can help you earn passive income, including NFT staking, NFT dollar drops, and NFT mining, etc. Then I'll show you an example of a project that employs each of those strategies to generate passive money.




1. NFT Dollar Drops


The first is what I refer to as NFT dollar drops. Essentially, an NFT project will be launched alongside a native token. Holders of NFTs are then given a set amount of tokens on a regular basis just for keeping them. It's usually done on a daily basis. 


If the NFT token's price rises, this might be highly beneficial. BearX, a collection of 3,700 genesis bears, is an example of this, however, it is by no means a recommendation to buy. BearX NFT holders receive ten $ROOT tokens every day, which is around $10 at current pricing. 


CyberKongz



This equates to around $50 every day if you own five BearX NFTs, however, this can alter at any time based on the current price of the Root token. If you could afford to buy five BearX NFTs on the low end, you'd pay anywhere between $10,000 and $12,000 and make roughly $1,500 per month, which is an incredible return on investment. 


weth vs ROOTx graph



BearX's income is once again tied to the price of the $ROOT token, which could be a source of concern. The chart's volume appears to be quite low, and the price is continuing to fall. So, before you get into any new project, think again. There are plenty of excellent projects like this one where you can make money. 


One thing you'll note about this collection is that it's designed as an extension of the BearX ecosystem and is a utility token, but it's mostly built for fun, according to their home page. It is neither an investment nor a financial asset. This indicates to me that the BearX authors are well-versed on OpenSea's terms of service regarding passive income from NFTs.




Important  to Know


Income-producing NFTs may be classified as investment securities by regulators. In the United States, anything that fits these four conditions under the Howey rule is considered investment security, according to the Supreme Court. 


First, the existence of an investment contract. Second, the formation of a common enterprise. Third, a promise of profits by the issuer, and finally, the use of a third party to promote an offering. As a result, NFTs may be classified as securities, particularly if they provide passive income. 


So, any NFT project that advertises giving out actual passive income to its holders is prohibited by OpenSea. This isn't a legal matter. OpenSea just does not want to deal with the SEC's bureaucracy in the event that an official ruling is made against passive income using NFTs down the line. 


As a result, it's a bit of a grey area right now, and you should proceed with caution. None of this is financial advice. All of this is purely for entertainment purposes.




2. NFT profit sharing


Profit-sharing is the second sort of passive income available through NFTs. This is a fascinating topic. NFT projects earn money through direct sales and royalties on future trades, and certain NFT projects will share this income with NFT holders as a thank you for being a member and as an incentive to stay a holder because you'll continue to make money. 


What's even more fascinating is that passive income from NFTs can help you reduce the risk associated with investing in NFTs. Now, if you earn enough passive yield while keeping your NFT, you might be able to gather enough awards and sell them off to cover the cost of your NFT. That's the big brain way because you won't be concerned about the immediate price because you've already recovered your full investment.


NoiaDucks is a project that currently does profit sharing. They're a group of 1000 NFTs that resemble CryptoPunks with ducks to me. To be honest, it's a touch unoriginal, but they attracted my attention when I read a tweet announcing the project's hefty 100% royalties and 51% profit sharing from the marketplace. 


NoiaDucks
pic credit: Twitter



Profit and royalty sharing will be higher than the usual 10,000 unit NFTs collection because they have such a small supply of only 1000 ducks. However, this is dependent on the volume of trade. The average NFT in this community sells for roughly $3,000, thus it doesn't take much for the community to make good money.




How to tell if a project is bullish


Another point I'd want to make is how to determine whether a project is bullish or not. So, here are some questions you should ask yourself. What is their track record for meeting project development and roadmap deadlines? Is the team considering community feedback? If that's the case, what's the best way to go about it? Finally, is the community's mood usually positive, or do many appear to be upset, or is there a lot of FUD


If something goes wrong with a project, NFTs can become extremely volatile, and the value can plummet. If you're going to invest in passive income-generating NFT projects, I'm not saying you should, but make sure you do your research and stay active on the project's Discord on a daily basis. 


Because if you have to sell, this will assure you don't miss anything vital As I previously stated, there are other opportunities, therefore there's no need in investing in a stinker that is causing you concern.




3. NFT staking


Staking NFTs is the next way to generate passive income. So certain Projects will have a dashboard built that allows you to lock up or stake your NFT in order to be rewarded in that project native token. With the inclusion of staking, this strategy is quite similar to the dollar drop method we discussed earlier. 


This is also clever because it encourages individuals to buy and hold their NFTs for extended periods of time rather than flipping them frequently. Wulfz NFT is one example of a project that does such. They don't have a website at the moment, though. 


On Twitter, they have a large following and a lot of activity. Wulfz owners will be able to stake their NFTs every day in order to gain $AWOO tokens.




4. NFT mining


Mining is the next source of passive income from NFTs. This is a fascinating subject. So, in short, you would buy an NFT, stake it, and then receive a share of a server's mining rewards in exchange for staking the NFT. 


So it's similar to buying a share in a crypto mining company through an NFT, except I'm sure they have to legally state that they don't offer an expected return on investment, or they'd be considered investment security. 


NFT mining
pic credit: Twitter


Enigma Economy NFT is one project that is doing this right now. They're a mining pool that, according to their plan, would mine Bitcoin and Ethereum. This implies that instead of getting paid in the native token of an NFT, such as $AWOO, you'll be paid in Ethereum, Bitcoin, or any other cryptocurrency a project is mining. 


The amount of Ethereum mined per NFT in Enigma is determined by the rarity characteristics of the NFT that you purchased, and your earnings will fluctuate depending on the price of Ethereum or whatever you're mining.




How to Make $57/day with NFT mining


So, let's say Ethereum stays at $4,000 each year, and you're making half an ETH per year with your Enigma Economy NFT, which is $2,000 per year. You'll need to make around $1,700 per month to earn $57 each day with NFTs. 


You'd need to own ten of these NFTs to make even close to this amount. At the cheapest price of 0.25 ETH, ten of these would cost roughly $11,750 for something that pays you $20,000 per year for doing nothing. That's not a bad investing opportunity. However, keep in mind that this is a relatively new and volatile market, so don't expect best-case outcomes.




5. NFT renting


Renting your NFTs, specifically through play-to-earn games, is the last type of passive income I'd like to cover. Many play-to-earn games require you to purchase a pricey NFT upfront before you can play the game and start earning money. 


When a game becomes successful, these NFTs can become quite expensive, and as a result, a new market has sprung up, and this may be my favorite type of passive income on the list. So you may buy an NFT that people desire to use in a game and start renting it out to make money. 


NFT renting
pic credit: Medium


Vulcan Forged is a game that will allow you to do exactly that. In the VulcanVerse, the land is an NFT. This territory is required for players to gain access to new resources. 


Those who cannot afford to purchase NFT land in the VulcanVerse must rent it. Those that rent the land can then play the game and start earning money. This is essential because some of the lands on the Vulcan Forged marketplace are ridiculously costly, selling for 845 PYR tokens, or around $32,000. 


So, as strange as it may seem to buy or rent digital land for $32,000 (about the same as some actual estate), it's one of my favorite NFT passive income sources because it's so simple to understand. You should be aware that renting assets is already a thing. 




Bottom Line


So, the key to making passive income with NFTs will be to conduct extensive studies ahead of time to verify that all of the boxes are ticked. To assist minimize your downside risk, make sure the project has a solid staff, a solid idea, and a solid community behind it. 


If all of that sounds be too much effort, you can always stick to yield farming altcoins or leasing out your cryptocurrency. So according to me, we are living in the best time in history to generate money. This is quite exciting.




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