Ledger, a company specializing in digital asset security and management, has shared four ways to earn passive income with NFTs.

NFT staking

"Staking allows individuals to earn rewards while retaining control over their digital assets, thus increasing their portfolio.

To stake NFTs, they need to be pledged as collateral to a blockchain network or liquidity pool for a minimum period known as the staking period. This method enables the network to process transactions quickly and enhances the security of the network.

In return for the transaction, staking rewards are received in the form of crypto tokens. The rarer the NFTs, the higher the staking rewards. These tokens can be exchanged and traded to convert the earnings into preferred assets. However, it is not possible to move or sell the NFTs while they are being staked."

NFT lease

Rental platforms, the latest passive income stream available to NFT owners, help determine rental fees and durations for NFTs.

Subsequently, this entire process is managed and monitored by smart contracts that terminate the rental at the specified time and return the NFTs to the wallet. Renting out NFTs increases the potential for passive income and the likelihood of winning the game for players.

"Play to Earn" games can serve as examples of games focused on generating income. Renting out NFTs is a beneficial method that benefits both the user and the player, creating a win-win situation for both parties.

Generating yield from NFT liquidity from elsewhere.

NFT liquidity pools allow for benefiting from the value of NFTs without selling them. The advantage of this method is the ability to generate passive income by leveraging the same value on other platforms while retaining ownership of the same collection.

NFTs are deposited into a vault on the platform, and in return, the platform issues local vTokens (ERC20) that hold a value equivalent to the base price of the NFT collection. These vTokens can then be deposited into DEX liquidity pools like Balancer and Uniswap to earn rewards. Once the earnings are obtained, the vTokens are returned, and for a small fee, an NFT from the same collection can be reclaimed.

Earning royalty fees:

Another way to generate passive income through NFTs is by earning royalty fees.

This method, which involves some variations, allows for earning income from digital artworks created by others. After creating a digital artwork, it needs to be minted as an NFT.

Minting involves turning the artwork into an NFT, making it a part of the blockchain. To do this, a smart contract with programmed technical details and royalty fees needs to be created. After this process, a royalty fee is automatically collected each time the NFT is sold. The most common royalty fees range from 5% to 10% and are typically paid when an NFT is sold.

For example, if an NFT is sold for $1,000 and the royalty fee is 5%, a $50 royalty payment would be collected, applicable for each sale of the token.