NFT farming is a new innovative concept that allows earning rewards and tokens by lending NFTs on the network. The idea is analogous to yield farming in the crypto sphere; however, you stake NFTs for rewards instead of coins. Besides bringing return, NFT farming also brings the much-needed liquidity to the market that otherwise remains sluggish, with people holding their assets hoping to get higher returns against their invested amount.
Online play-to-earn games were quick to incorporate NFT farming concepts and build the required infrastructure to attract users to dabble their hand in NFT farming and achieve meaningful full returns. Take, for example, zookeeper game that allow farming Wasp and Zoo tokens which give higher APY (Annual Percentage Yield) as rewards.
It’s a bit technical; we get that; therefore, we have put up this incredible NFT farming tutorial that lets you easily understand what NFT farming is and how NFT farming works. So, hop on! If you want to learn more you check out 99starz.io
What is NFT Farming?
It may not have escaped you that for the past few months, the ecosystem of non-fungible tokens (NFT) has been in full rage. Every corner of the digital world is brimming with NFT news and the exorbitant amount these digital assets are bringing to their owners. The artist’s work Beeple has sold for $69 million. Likewise, the Twitter boss’s first tweet is selling for over 2 million dollars.
Extraordinary, right, but something is missing here. Although NFTs have the potential to bring huge returns ( no guarantee, though), the market moves sluggishly. Also, there have been only a few ways to make something from NFTs – the most prominent one is to buy NFTs, hold them for a time and then sell them at a higher price. Simple and Straightforward! But things are changing now, thanks to the enthusiastic efforts of digital collectors. They have found a new way to mint digital assets and monetize them for gainful returns.
We are talking about NFT farming. It has brought the old concept of Yield farming from the crypto world and merged it with NFTs that allow new ways to financialize NFTs and earn rewards. NFT farming is an emerging concept that lets you earn NFT tokens as a reward. The new concept has emerged from the merger of NFTs with DeFi technology (decentralized financing). So, farming here is just a term to simplify the process that points out to the new use of NFTs. NFT farming is analogous to Yield farming, where you receive interest on your deposits, but here you are awarded NFTs or staked tokens.
Instead of just sitting in the wallet and doing nothing, NFT farming actually allows you to put your digital asset to work. The activity brings you more returns, and you have a more extensive portfolio of NFTs. It’s similar to farming, where you put the seeds, nurture the crop, and then enjoy the yield; NFT farming allows you to put your NFT to a network (example can be NFT farming based online games), let it grow your assets, and then you reap the benefits or rewards.
How Does NFT Farming Work?
NFTs are essentially tokenized assets; therefore, NFTs farming works much similar to Yield farming. You need a token and put it in a staking pool, a network of your choice ( think about DeFi games).
The blockchain protocols lock your asset in the pool. Users then earn a reward based on the specified APY. Of course, the award will depend on the number of NFTs you have pledged to the pool.
Users staking their NFTs are still the owner of their assets and free to remove them from the network whenever they wish – of course, the terms and conditions differ from network to network. By staking their NFTs, the owners put their idle assets to work and receive rewards in exchange.
If you wish to earn rewards for yourself by NFT farming, you will need a wallet that can hold NFTs. Coinbase Wallet, Rainbow Wallet, and Matamask Wallet are best. Next, you need certain farm tokens for staking them in the staking pool and earning rewards. $MEME Genesis NFT Farm is a great platform that lets you create free Meme tokens, which you can stake and earn extra rewards.
Are There Any Risks Involved In NFT Farming?
At present, the infancy of the whole NFT farming ecosystem seems to be the only risk. The infrastructure is in the development stage and, therefore, not robust enough to tackle any discrepancies that may arise.
The early development stage of the NFT farming solution also cannot rule out the possibility of contract bugs. NFT platforms are composed of connected blocks, so if a bug disrupts one block, all the connected blocks will suffer the disruption. In this scenario, NFT traders and collectors will have to suffer huge losses.
NFT Farming and Gaming
One emerging trend in NFT farming is its merger with the gaming industry. Play-to-earn games are already basking in popularity. A new layer of NFT farming on gaming platforms holds immense potential and is already witnessing exponential growth.
Gamified NFT farming is a DeFi-based ecosystem that allows users to create, trade, earn and leverage various non-fungible tokens while playing games. These gaming platforms feature playful yield farming, staking, and rewards. The aim is to offer players an experience of immersive blockchain gaming while at the same time earning rewards from NFTs and making money.
Incidentally, there is a massive surge in the popularity of yield farming-based blockchain gaming platforms. These platforms, such as Mobox and Zookeeper, etc., seek to grant users access to a wide range of NFT-supported DeFi products and various revenue opportunities. Besides, they also increase the liquidity of digital assets by playing some of the critical features of the DeFi industry, including farming and staking.
NFT farming represents the true zeal of human yearning for innovations. It presents a simple solution to the most challenging problem of the NFT market, which is liquidity. By introducing the capabilities of the DeFi ecosystem to the NFT market, the new solution has given the blockchain community and NFT traders a new way to monetize their NFT assets other than just buying and selling.
Now they can earn a significant return without actually putting their NFT collection on sale. Although the whole NFT farming ecosystem is in its infancy, it has undoubtedly garnered much hype. However, there is still a long road to cover before offering a stable environment to safely trade NFTs and earn rewards.