Lending and renting are two concepts that have proven extremely effective at generating income from physical assets. For several centuries, man has developed various licensing methods with ownership and property rights. There has been a significant increase in digital assets with the rise of the internet in the last one or two decades. However, confirming their authenticity, ownership, or rarity was difficult. Then there’s blockchain technology, which can solve all of these issues while also creating numerous opportunities in the digital world.
A Brush-up On NFT Rentals
NFTs or Non-fungible tokens are unique blockchain-linked digital assets, distinguishable with metadata. Unlike Cryptocurrencies, we can represent any real-world item on blockchain.
People are investing more and more money in obtaining NFTs as they become more familiar with blockchain technology. The issue here is that as the number of NFTs grows, your portfolio becomes less and less liquid. Most NFT holders are currently holding on to their NFTs, hoping for a price increase. NFT Rentals will increase the liquidity of your portfolio and generate a new revenue stream without requiring you to relinquish ownership of your NFTs.
Do you wonder – how does it work?
After determining the daily rental price and maximum rental period, lenders can send the NFTs they want to rent out to a smart contract. Borrowers then specify how long they want to “own” the NFT, paying the rental fee plus a collateral amount equal to the NFT’s price, which they will receive when the NFT is returned.
It’s not an alien concept in the NFT space: reNFT is a rental protocol facilitating the lending and renting of tokens along with an escrow service. In the NFT sector, it’s becoming more common for projects to include community benefits as part of the ownership of their tokens. ReNFT allows owners to cash in on these benefits without selling the underlying asset.
NFT Rentals – A Passive Income Source
After only a year, many NFTs are already out of reach for the average consumer. Many of these digital assets, valued in millions of dollars, will almost certainly never be held or used by the average person.
Imagine you own an art NFT bought from a crypto art NFT marketplace, which you wish to monetize quickly (but couldn’t!). Would you sell it for a rather lesser price? It shouldn’t be that way. Instead, you could rent it out – and generate income. Each time you rent it, the ownership details remain with you, exactly as you bought it.
Cryptopunks can also rent out their digital selves, allowing others to “flex” their online personas (limited-time duration) while earning some passive income. As the metaverse industry develops and avatars become more valuable and important, this scenario becomes more relevant.
Finally, there will be a world of digital landlords one day. Owners of the $2.3 million USD parcel of land in Axie may rent it out to others who will use the digital space for their purposes in the future (e.g., putting a digital storefront on top of the land). Digital land rent will be paid to digital landlords one day.
Multi-chain Deployability
Most NFT owners (over the years) have been preferring Ethereum for its multi-faceted technical capability. However, during recent times, Polygon (Matic) has been drawing good attention as Ethereum’s high gas fee is a looming issue. Other high-performing blockchains, such as Binance Smart Chain, Polkadot, and Solana, may soon take Ethereum’s place. Polygon is a scaling solution that was previously known as Matic. It uses sidechains to connect blockchains and decentralized applications to Ethereum, allowing transactions to be settled instantly and gas fees to be reduced to zero.
NFT rental and digital landlord models may appear far-fetched to some. Still, with NFT asset prices continuing their meteoric rise and NFT assets producing no value while slumbering in digital wallets, a leasing and rental market unlocks enormous value for both NFT owners and consumers.
The Final Thoughts
As the NFT space continues to take shape, the renting model could open up short-term monetizing opportunities. The primary beneficiaries from NFT rental are the get-rich-quick personalities – as they could generate passive income even when they are ‘HODL’ing!