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Guide: How to Make Money With NFTs

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.

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.

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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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.

Infographic answering the question "Can you make money with NFTs?" by providing 8 concrete examples.
Infographic showing 8 ways how to make money off NFTs.

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.

Infographic showing how to earn money creating and selling NFTs
Infographic showing how to earn money creating and selling NFTs

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.

How to Make Money With a PFP NFT Project

Infographic showing how to earn money with a PFP NFT project
Infographic showing how to earn money with a PFP NFT project

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.

These profile pictures are particularly popular because they allow social media users to show off their expensive NFTs directly in their profiles.

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.

Infographic showing how to earn money from NFT royalties
Infographic showing how to earn money from NFT royalties

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!

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.

Infographic showing how to earn money investing and trading NFTs
Infographic showing how to earn money investing and trading NFTs

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.

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.

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.

Infographic showing how to earn money licensing intellectual property
Infographic showing how to earn money licensing intellectual property

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.

Infographic showing how to earn money staking your NFTs
Infographic showing how to earn money staking your NFTs

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.

Infographic showing how to earn money providing liquidity for NFTs
Infographic showing how to earn money providing liquidity for NFTs

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.

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.

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.

Infographic showing how to earn money renting out NFTs
Infographic showing how to earn money renting out NFTs

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.

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.

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.

Here are some platforms that currently facilitate renting NFTs:

Conclusion

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.

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.

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