So you’ve realized that NFTs are the latest talk of the town.
But you still don’t know how to make money with NFTs.
Don’t worry because we’ve got you covered on all bases when it comes to making money with NFTs.
In this guide, we’ll show you how to make money from NFTs even if you are not an artist or don’t know how to code.
We cover 8 of the most common ways to profit from NFTs for active as well as passive income.
But let’s waste any more time and get right to juicy details.
Table of Contents
Key Points (tl;dr)
If you’re reading this, then you’re wondering how to make money with NFTs. Well, here’s a quick overview of the top 8 ways to make money of NFTs right now:
- Create Art to Sell as NFTs
- Build a Community Project With NFTs
- Earn Royalties on NFTs
- Invest and Trade NFTs
- License Out the Ip of Your NFT
- Stake Your NFTs for Yield
- Provide Liquidity to Earn Yield
- Rent Out Your NFTs
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Guide: How to Make Money With NFTs
www.tokenizedhq.com
Here’s the answer. Great article by @ChrisHeidorn right here: https://tokenizedhq.com/how-to-make-money-with-nfts/
How to Make Money With NFTs
There’s isn’t one particular way how to make money with NFTs. You can buy and hold them in order to sell them for a profit at a later stage. You can also day trade them. You can license out IP that way be attached to an NFT. You can even stake your NFTs on some DeFi protocols. The point is, this is a completely new industry and we are just getting started.
As with most things in life there’s isn’t a single specific way of doing things.
NFTs are a relatively new concept that builds upon blockchain technology.
It allows us to create unique entries on a blockchain of our choice which then become digital representations of assets.
These assets can be physical items, such as paintings or real estate, or intangible items, such as club memberships, game items or profit shares.
While many of these things could easily be achieved before blockchains as well, linking them to NFTs allows for these items to change hands much quicker.
A lot of the friction involved with transferring or proving ownership is eliminated by using NFTs.
There are tons of ways how this may translate into new innovative business models in the future.
However, there are already quite a few ways how to make money on NFTs by simply interacting with them.
Some ways are more active, while others can provide you with passive income.
Anyway, your initial question was: How to make money off NFTs.
And in this article, we’ll cover 8 different ways how you can make money from NFTs starting today.
How to Make Money Selling NFT Artwork
If you’re an artist, the easiest way how to make money with NFTs is to create art that people are willing to collect and pay for and then sell it as an NFTs. Every time the artwork is resold, you will earn a royalty based on the selling price.
We are currently still in the early stages of this new NFT revolution, which is why most of the activity around NFTs is related to artwork.
If you are an artist and are curious enough to explore this new way of verifying ownership, then NFTs might just be an excellent way for you to boost your career.
You can create single pieces of art (also referred to as 1/1s) or you can create an entire collection of artwork that you can tokenize using a blockchain such as Ethereum.
If you don’t know what to put in the metadata, you can refer to one of the NFT description examples that we’ve put together.
Once you’ve created and minted your NFTs, you can sell them on one of the many NFT websites and earn money from the sale.
If you are not familiar with the term “minting”, our detailed guide “What is Minting NFTs?” will teach you everything you need to know to get started.
Just make sure you know how to accept offers on OpenSea so that you can actually cash in when the first bids start hitting your inbox.
How to Make Money With a PFP NFT Project
Most of the trading activity in NFTs is currently centered around Profile-Pic-Projects which are using NFTs as a funding mechanism for their big projects. These projects are startups, their roadmaps are pitch decks and 99% of them are likely to fail.
Another way how to make money with NFT art is to start a full-blown project that is centered around a community.
Think of this more like a startup, where you’ll obviously need someone to create the artwork for the collection but you’ll also need a bigger team in order to handle marketing, development and community management.
Most of the bigger projects are so-called “Profile Pic”-Projects (PFP) that usually have up to 10,000 unique tokens with varying rarity.
Usually, they use some sort of NFT art generator to make the creation of the unique artwork a lot easier.
If you’re into pixel art, you can also use one of the many pixel art generators that are available online and that will help you do a lot of the heavy lifting.
These profile pictures are particularly popular because they allow social media users to show off their expensive NFTs directly in their profiles.
Combine that with the Twitter NFT verification and you’ve got the perfect flex in the online world.
Some projects are trying to create popular brands (e.g. Bored Ape Yacht Club), others are looking to develop games (e.g. Cool Cats) and some are moving towards publishing (e.g. Huxley Saga).
Most of them are using NFTs as a funding mechanism and use the community and strong followership that will help promote their projects.
Building a successful project is very difficult, so make sure you’ve got what it takes to pull it off.
How to Earn Royalties With NFTs
The NFT royalty is a crucial mechanism that ensures that the original creator continues to benefit from his or her original work. The money the creator makes can also ensure that time, effort and money are continuously invested into growing the project.
One of the most revolutionary aspects of NFTs is that you can program a fixed royalty into the underlying smart contract.
This means that every time a token is sold on one of the many NFT marketplaces, the original creators receive a portion of the sales volume in the form of royalties.
This is particularly attractive for artists who traditionally have been cut out of the majority of the profits made on the back of their work.
Artists may finally have a mechanism that will allow them to truly live off of their work.
Royalties are also very interesting for founding teams because they provide ongoing revenue which they can re-invest to help grow the project.
Just make sure you price things right!
To learn more about NFT pricing, we recommend checking out our guide on how to price your NFT.
How to Make Money Trading NFTs
You can invest in NFTs much like you can with stocks. Buy NFTs when they are undervalued and sell them when they are overvalued. Long-term investors will look for value and growth potential before investing in a project.
By far the easiest and most obvious way how to make money with NFTs is to simply invest in the projects you believe in and sell them for a profit when the value increases.
This is essentially the same thing as investing in stocks, except that these are all early-stage startups or individual artists.
That’s why it’s crucial that you understand what makes a good NFT project.
If you are a skilled trader you can also make money from simply buying and selling NFTs as they rise and fall in value.
However, please note that the vast majority of people are incredibly bad at trading and do not have the experience or skill to do so profitably.
At the very least make sure you invest in one of the NFT analytics tools that we’ve covered here on Tokenized.
And most importantly, make sure you invest some time into understanding OpenSea taxes!
How to Make Money With Your NFT’s IP Rights
If you hold an NFT of a popular blue-chip project, you may have commercial IP rights. In that case, you could license out the IP to your specific token to someone who believes they can create a valuable product based on your character.
More and more projects provide the holders of their NFTs with commercial usage rights for the artwork.
The most prominent example of this is Bored Ape Yacht Club (BAYC).
Several holders of BAYC, including NBA players, have used these rights to create custom shoes and other apparel that shows their Ape.
Another BAYC-focused project “Jenkins The Valet” is using the IP of hundreds of Ape holders to create a community-generative NFT book.
The possibilities are endless and it will be interesting to see how this evolves given that brand management has historically required some form of centralized control.
How to Earn Yield Staking Your NFTs
You can stake (lock-up) your NFTs into a DeFi protocol and earn yield in the platform’s native token. Those tokens can then be swapped for other cryptocurrencies, which in turn can be traded for fiat money if you need to.
We’re now slowly moving into a space that has traditionally been exclusive to the decentralized finance (DeFi) world in cryptocurrency.
You may be familiar with the practice of staking your cryptocurrency tokens.
Staking refers to the process of depositing or “locking away” your coins into a DeFi protocol smart contract that generates yield.
Well, a similar process is now available for many NFTs as well.
So if you looking for ways how to make money from NFTs in a passive way, this might be for you.
The yield you earn will usually vary and most of the time you will be earning native utility tokens of that platform.
Some platforms which facilitate the staking of NFTs include:
How to Earn Yield by Providing NFT Liquidity
Staking your NFTs to a liquidity pool can also earn you yield in the platform’s native utility token. However, it is strongly advised that you only use floor NFTs (the cheapest kind) for this as there is no guarantee that you will get back your original NFT once you unstake from the vault.
Similar to the process of staking, you can also add your NFTs to a liquidity pool.
When you add token(s) to the liquidity vault, you will usually receive native tokens which represent your share of the vault’s value and thus also your share of the trading fees generated via the automated market maker (AMM) of the liquidity pool.
Since there is no guarantee that you will be able to get back your specific NFT, it is highly recommended that you only use tokens purchased at the OpenSea floor price for this purpose.
Floor price NFTs are often considered “more fungible”, despite not actually being fungible at all, because their value tends to be the same or at least similar.
An alternative to NFT liquidity pools is NFT loans, where you provide a borrower with liquidity and receive his NFTs as collateral in case he defaults.
How to Make Money Renting Out Your NFTs
Many NFTs come with specific utility. If a holder doesn’t want to sell his token and someone else doesn’t want to buy a token, the holder can rent it out to the other person for a pre-defined period of time and at a certain price. The rental fee is a passive income source for the holder.
The last way how to make money off NFTs is by renting them out for someone else to use for a certain period of time.
There are various reasons why someone might want to temporarily rent your NFT and they depend on the underlying business model of the NFT.
For example, in some of the best NFT games, certain NFTs may boost the holder’s chances of winning.
Or, if your NFT represents a club membership (e.g. Flyfish Club) or a conference ticket (e.g. VeeCon), you may rent out your token to someone who wants access to these locations or events.
This is exactly the kind of exclusive stuff that token gating and OpenSea unlockable content is meant for.
Depending on how much demand there is for the associated utility of the NFT, you may be able to earn a respectable amount of passive income from renting it out.
Just imagine a future where real estate ownership is verified via the blockchain.
NFT rental for holiday apartments might end up being an excellent way how to make money from NFTs in a passive way.
Here are some platforms that currently facilitate renting NFTs:
Conclusion
If you were led here by our guide that answers that question “Can You Make Money With NFTs?”, then we hope you found this article useful.
Don’t believe all the naysayers who refuse to acknowledge the underlying technology and constantly talk about NFT pyramid schemes.
As you can see there are many ways how to make money with NFTs and some of them probably came as quite a surprise to you.
Tokenization is an exciting new trend that has already enabled many new business models and will continue to drive innovation.
Do bear in mind that most, if not all of these ways of making money off NFTs also come with their own set of risks.
There are a lot of scammers out there and many people new to the industry are asking: Is OpenSea safe? Are any marketplaces safe?
We can assure you that they are. But you still need to be aware of some risks.
So before you jump into something, please make sure you do your own research before you invest in anything.
Here at Tokenized, we want to help you learn as much as possible about the coming NFT revolution. We help you navigate this fascinating new world of non-fungible tokens and show you how you can integrate tokenization into your own business.
