NFT Stake, PoS, and more.
Staking in the crypto world is the umbrella term used to denote the act of granting one crypto-assets to any cryptocurrency protocol and earn a reward in return. NFT as an asset is both unique and desirable and thus, becomes an important part of crypto staking.
NFT or Non-fungible tokens are digital assets representing almost anything that can be called digital artwork. NFTs with their unique identifying codes are one of a kind. As we talk about NFT being a non-fungible token, we can say that NFTs are essentially tokenized assets.
If we talk about NFT as crypto assets, NFT can be staked in a platform that functions for its safekeeping and governance. Staking allows users to lock up their tokens by participating in securing the network and in return for securing the network, users get rewarded.
Staking of NFT tokens as an asset comes with the potential to create a form of passive income for the users. NFT stake creates liquidity and utility for NFTs and the earning of rewards is determined by various factors such as the asset’s capacity to develop passive income like royalties.
NFT staking basically is about holding NFT tokens in a cryptocurrency wallet which means supporting the security and operations of a blockchain network. In order to understand staking better, let us understand how PoS works.
PoS or Proof of Stake is a mechanism that allows owners to put up their tokens as collateral and transaction to be gathered into blocks that are linked together to create the blockchain. The idea is that participants can lock their stakes, and the protocol will award the ability to validate the next block to one of the participants. Token stakers typically gain increased ownership of the token over time as a result of network fees, freshly created tokens, or other compensation mechanisms.
Proof of Stake chains generates and validate new blocks through the staking mechanism. Validators engage in staking by locking up their coins so that they can be randomly selected by the protocol at predetermined intervals to form a block. Participants who stake more amount have a better chance of getting selected as the next block validator. And with the staking of tokens, the participant will be able to claim the clock and earn the fee rewards.
The idea of NFT staking is still fresh and needs many developments but comes with various opportunities for the users to create another income stream and keep their wallets funded.
