NFT's are exploding

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Over the course of 2021, the non-fungible token (NFT) market expanded into a significant area of the cryptocurrency business, with the total amount spent on NFT purchases topping $12.6 billion, up from $162.4 million at the year's beginning.
And while Ethereum is used to manufacture, purchase, and sell the vast majority of NFTs, hefty gas fees can make the process prohibitively expensive. According to Raribleanalytics data, the average cost of minting a single NFT on Ethereum is $98.69 in gas fees, while the average cost of minting NFT collections is $900.

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Many investors and developers only try to sell their NFTs on secondary markets, like OpenSea, in order to recover these expenditures. However, there are other methods to make money with NFTs than selling them for more than you bought for or made them for.

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What are NFT's

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For those who are unfamiliar with the idea of NFTs, picture them as exchangeable digital receipts kept on a blockchain, a publicly distributed database that anybody may access and independently verify at any time. These digital receipts provide distinctive data that may be used to establish the identity of the single owners of particular assets, whether they are tangible or immaterial.

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However, it should be noted that NFTs do not really save the digital object they stand in for. They only direct users to the file's location, which is available elsewhere on the internet.

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NFTs can never represent the same thing again, hence they cannot be exchanged for another in the same manner that bitcoins can. They are known as "non-fungible" tokens for this reason.

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How to use NFTs to produce passive income

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Renting NFTs

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Renting out your NFTs, particularly ones that are in great demand, is one method you might generate passive revenue.
To increase their odds of winning, players can borrow NFT cards in several card trading games, for instance. As anticipated, smart contracts regulate the parameters of the agreement between the two parties. As a result, NFT customers often have the discretion to choose the length of the leasing agreement and the NFT's lease fee.
reNFT is a prime illustration of a website that lets users borrow or rent NFTs. This enables lenders to set daily rates, which now average between 0.002 and 2 wrapped ethereum (WETH), and maximum borrowing lengths.
The native coin of Ethereum, ether, is WETH in the ERC-20 format (ETH).

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Royalties for NFT

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NFT developers can apply terms that charge royalties anytime their NFTs are sold on the secondary market thanks to the technology that underpins NFTs. In other words, even after selling their works to collectors, the artists can still get passive revenue.
With this, they can continuously get a portion of the NFTs in question's sales price. The original author will get 10% of the final sale price each time their digital artwork is sold to a new owner, for instance, if the royalty rate is set at 10%.
Keep in mind that while minting the NFTs, developers frequently specify these fixed percentages. Furthermore, the entire process of allocating royalties is controlled by smart contracts, self-executing computer algorithms that uphold contractual commitments. Because the procedure is totally automated, you as the creator do not need to manually enforce your royalty conditions or keep track of payments.

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Stake NFTs

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The ability to stake NFTs is one advantage of the union of NFTs with decentralised finance (DeFi) protocols. Staking is the process of adding digital assets to a DeFi protocol smart contract and "locking them away" to produce a yield.
While some platforms accept a variety of NFTs, others demand that you buy native NFTs in order to get staking token incentives, which are frequently paid out in the platform's native utility token.

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NFT Liquidity

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It is now feasible to contribute liquidity and get NFTs in return to establish your position in a specific liquidity pool because of the ongoing integration of NFTs and DeFi infrastructures.
For instance, the automated market maker (AMM) will issue an ERC-721 token, also known as LP-NFT, that contains information about your portion of the total amount locked in the pool when you offer liquidity on Uniswap V3. The token pair you placed, the tokens' symbols, and the address of the pool are also carved into the NFT.
You can immediately liquidate your position in the liquidity pools by selling this NFT.

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NFT yield farming

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‍Users may now farm for yields utilising NFT-powered items since NFTs are quickly becoming a key component of AMMs. A technique known as "yield farming" is using a variety of DeFi protocols to get the best return from your digital assets.
The LP-NFT tokens released as liquidity provider tokens on Uniswap can also be staked on other protocols to earn extra yields or used as collateral. Consider it a way to earn a yield on top of a process that already generates a yield. This opportunity opens up a multi-tiered income-generating approach perfect for yield farmers.

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But keep in mind that NFTs and the supporting smart contract technologies are still rather young. Since they are still in their early stages, many of the applications offering the prospects described in this article. Because of this, it is advised to perform your research and comprehend the hazards before using any of the above-mentioned tactics.