By now, pretty much everyone inside the blockchain world has heard of NFTs, the first-ever verifiably unique digital assets. However, when people think about NFTs, they probably think about the massive price tags associated with them, such as the $69 million NFT collage created by world-renowned graphic artist Beeple. Of course, there are also low-level and much more accessible NFTs, but when thinking about this new type of digital asset, no one really thinks about their ability to be earned.
Comparing earning to buying NFTs is like comparing apples to oranges, as the motivations and thought processes behind the decisions are drastically different. When earning NFTs, which is made possible through NFTrade’s NFT farming platform, users do not have to spend any of their hard-earned crypto or fiat to obtain them, as they receive NFTs by staking assets they already possess. This process is somewhat similar to an interest-bearing savings account, except instead of earning an APY, you can receive a collectible or utility-based NFT. These NFTs can be pieces of art, in-game items, tokens that offer holders exclusive benefits, and much more. Giving NFTs away as a reward instead of selling the item has created an entirely new methodology for users to view non-fungible tokens.
NFT Farming Benefits for Users
Both project developers and end users alike benefit from NFT farming, creating a win-win situation for all parties involved. However, the way they benefit is quite different. First, let’s start with how token holders and end users benefit from NFT farming.
For token holders, the benefits received from NFT farming are quite clear. Many users hold tokens idly in their wallets, waiting for them to hopefully increase in value as their respective platforms grow. This is equivalent to keeping your fiat money stored under your bed, where it can not help you produce any additional value. Instead of letting your coins sit back and do nothing, through NFT farming, you can have your tokens work for you to earn rewards.
As stated above, these rewards can take many forms, and generally fall into two categories — collectible or utility-based NFTs. A similar manifestation to traditional physical and unique trading cards, these different collectible NFTs have different values depending on their provenance and market demand, with some collectibles retaining and growing in value over time. For example, imagine if Binance made it possible for users to stake BNB and earn NFTs right when BNB came out; the first NFTs produced by Binance would probably be highly collectible and sought-after, driving their price over time as the platform continues to grow.
Beyond acquiring collectible NFTs, users also have the opportunity to earn utility NFTs. These NFTs can take many different forms, with the biggest dependency being what the project developers want to offer as rewards to its user base. For example, in NFTrade’s first NFT farm, a collaboration with Xcademy, a decentralized content creation platform, XCAD token holders had the opportunity to earn various NFTs. The most popular NFT from Xcademy’s first round of NFT farming were NFTs giving users allocation rights in an upcoming IDO with one of their partner projects, Opulous. Traditionally, qualifying for highly anticipated IDOs has been extremely exclusive, and this is still the case, but through NFT farming, these opportunities become more available to everyday users, expanding on what NFT farming and NFTs can offer users. Even better, if the user earns the allocation NFT but does not want to redeem it, they have the option to sell it or swap it on the secondary market, making the value proposition behind these NFTs quite clear.
NFT Farming Benefits for Project Developers
We have covered the benefits that token holders receive via NFT farming, now, let’s examine how project development teams can benefit. For project developers, there are many distinct benefits offered that they will not receive through traditional staking mechanisms. For one, the project does not have to further dilute its token supply by giving away high yields to stakers. Although this is still an option, as the native tokens can be packaged into an NFT to make them earnable by users, projects have the option to utilize these tokens previously designated for staking rewards for other causes.
Another major factor is the ability of project developers to lock up the liquidity of their native tokens. When a user is staking tokens in a NFT farm, the tokens are put to use, and therefore can not be traded. This allows for sell-side pressure to be reduced as long as users are staking to earn NFTs, putting projects in a stronger position regarding token pricing and demand. If demand for a token is constant, but the supply is lowered because circulating tokens are locked up in a NFT farm, this should theoretically benefit the token’s price.
All-in-all, NFT farming is a novel solution to a problem that users and project developers may not even have realized they had, allowing all involved to benefit in different ways. By adding additional utility to tokens in the form of NFT farming capabilities, NFTrade is introducing a new way for the blockchain community to grow and expand its capabilities. Even with a tapering off of NFT buying volume since the beginning of 2021, NFT earning through NFT farming is just getting started.