You’ve heard that people are now renting NFTs and you want to know more?
Things are moving incredibly fast in the NFT space.
So fast, that it’s becoming difficult to keep up with the innovation.
But don’t worry.
In this guide, we’ll explain what NFT rental is, why someone might want to rent an NFT and how it all works.
Let’s get right to it.
Key Points (tl;dr)
- Imagine you own an NFT that has utility. You can either use that utility yourself or you can rent NFTs out to someone else for a fee.
- There are various reasons why someone may want to rent NFTs. Some what to flex an expensive NFT as their profile pic. Others want to use them in a game because it may help them level up faster. And some NFTs come with exclusive access privileges to venues or content.
- Renting out NFTs may eventually become a reasonably lucrative business model with attractive passive income streams.
- There aren’t many NFT rental marketplaces right now, but the most prominent prominent is reNFT.
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What Is NFT Rental and How Does It Work?www.tokenizedhq.com
Here’s the answer. Great article by @ChrisHeidorn from @Tokenized_HQ here: https://tokenizedhq.com/nft-rental/
What is NFT Rental?
An NFT rental involves a person who owns a particular NFT and another person who needs an NFT for a limited amount of time. NFT rental marketplaces use DeFi-like blockchain protocols to enable safe transactions and also ensure that the NFT is returned to the owner after the rental period expires.
By now most of us have finally understood the concept behind NFTs and I think we all agree that they enable some remarkable business models.
However, the speed at which innovation is moving in this space is absolutely staggering and it’s starting to become difficult to keep up.
NFT rentals are a relatively new concept.
These blockchain protocols allow owners of NFTs to lend their NFTs to total strangers for a set period of time and price while ensuring that the original owner also gets their assets back.
So it’s literally a temporary rental, similar to rending a car or a DVD (yes, there was a life before Netflix).
It’s important not to confuse this with getting an Ethereum loan on an NFT that you own.
Those are two completely different things.
I’m sure you’re wondering why anyone would ever want to rent an NFT.
Why Would Someone Rent an NFT?
Many NFTs come with some form of utility. This utility almost always has a market value. The owner of the NFT may not want or be able to make use of this utility all the time. Renting out the NFT allows them to potentially generate passive income on their assets.
First of all, NFTs can become quite expensive.
Not everyone can afford to buy certain NFTs or might only have use for them for a limited time.
So it’s not really any different from deciding whether to buy or rent your home.
Nevertheless, the reasons for renting an NFT are obviously vastly different from what we’re normally used to in real life.
Status: People Like to Flex
Humans are social animals and their relative position in society matters to them.
Signaling to someone that you have a lot of money can influence how they perceive you.
In the real world people sometimes rent a Lamborghini for the weekend because they want to pretend that they’re filthy rich.
In the online world (let’s not call it the metaverse just yet) this type of signaling usually happens on social media.
Friction: Art Exhibitions
Galleries, museums, and other art exhibitions around the world are beginning to see the value in NFTs.
It’s an exciting new art form which they are keen to put on display.
NFT rental services make it significantly easier and safer for the owners of artwork to serve these venues.
Upgrade: Gaming Items
Renting NFTs with special capabilities can make sense if it allows the user to earn more points within a play-to-earn game.
Axie Infinity’s scholar program works in a very similar way.
Many scholars can’t afford an Axie, so they enter a partnership with a manager who owns NFTs but doesn’t have time to play the game.
In this Axie Infinity rental-like model, both sides share the profits.
Early Access: Media Content
Some NFTs provide early access to media content.
Ashton Kutcher’s and Mila Kunis’ NFT project Stoner Cats, which is essentially a crowd-funded TV series, requires you to hold an NFT in order to watch to show.
Someone who is purely interested in watching the show might want to rent it from someone rather than buy the entire token.
Exclusivity: Membership Access & Ticketing
This category is actually one of the most relevant ones.
It is very likely that in the future many experiences and venues will require some form of membership NFT in order to preferred access to an event.
If someone cannot attend the event, he may want to rent it out to someone else, so that the utility of the NFT isn’t lost.
In a similar sense, exclusive restaurant concepts, such as VCR Group’s Flyfish Club require you to hold an NFT in order to reserve a table.
Whenever you’re not using it, you could rent it out to someone else who wants access to the city’s most exclusive dinner.
How to Make Money With NFT Rental
I’m sure you’re familiar with the concept of passive income.
We see it with certain business models and especially with hard assets such as real estate.
If the NFTs you’ve purchased hold utility value that goes beyond pure aesthetics, you may be able to monetize your NFTs in ways you didn’t think of before.
It is very likely that NFTs which come with exclusive membership privileges will become assets that yield recurring income.
Now, obviously not every NFT will become such a sought-after asset.
Therefore it’s important that you always do your own research before pursuing any of these business models.
Where Can I Rent NFTs?
The market for NFT rentals is still relatively small. That is why there aren’t many NFT rental marketplaces yet. The most popular ones are reNFT, Vera and Trava NFT.
If you’ve already searched Google for NFT rental marketplaces, you most likely noticed something.
There aren’t a whole lot of them available yet.
Remember, NFTs are still very new and barely known to anyone beyond the realm of cryptocurrency.
Nevertheless, NFTs are poised to blow up over the next 2-3 years.
That is also why investors such as Animoca Brands have invested $1.5 million on projects such as reNFT.
Some of the NFT platforms that currently offer rental services are:
GaryVee was right: NFTs are going to eat up the entire world.
And guess what, they already are.
While many of the current projects and use cases are surely still overhyped since there simply isn’t enough demand for them yet.
However, the sheer amount of innovation that is happening in this space is staggering.
Investors who are looking to acquire assets that have the potential to yield passive income should definitely consider taking a look at rentable NFTs.