Key Takeaways:
- Although the NFT market is based on speculation, there is a way to mitigate the risk.
- The greater the NFT’s utility, the greater its potential value.
- One of the most profitable NFT utilities lies in blockchain gaming.
- Blockchain gaming facilitates play-to-earn income, based on resource rarity.
- NFT flipping relies on the project’s familiarity and liquidity to earn consistent profits.
In just two short years, non-fungible tokens have gone from blockchain novelty to something akin to online casinos.
However, although both industries rely on speculation, gambling is always set up to favor the house. In contrast, the NFT market is diverse, decentralized, and organic.
Many people think that getting NFT returns depends on getting on the whitelist for a potential blue-chip project. Indeed, this would be the shortest path for an under-one ETH seed to turn into a 10–100 ETH tree.
But, there are more reliable ways to earn money from NFTs than just waiting for blue-chip NFTs to drop in our laps.
3 WAYS To Make Money With NFTs
1. NFT Income From Play-To-Earn (P2E) Games
What better way to earn money than through fun? Axie Infinity paved the road to blockchain gaming with its P2E model. The concept is quite simple. As you know, any digital asset can be tokenized and made into NFTs.
In video games, this means things like lands, characters, items, equipment, and so on. All the things that make a game mechanic work. In the case of Axie Infinity, it was the first game to use P2E by tokenizing Axie, the blobby, cute creatures that players use in turn-based tactical battles.
The earning part comes in when the following components are combined:
- New players have to get three Axies to start playing the game. This represents a new cash inflow into Axie’s virtual economy.
- As NFTs, Axis themselves can be improved to perform better in battles.
- The more players perform with better Axies, the more other tokens they can earn. For instance, besides Axie NFTs, the game has two other tokens — Smooth Love Potion (SLP) and Axie Infinity Shards (AXS).
- Gamers earn these tokens by playing, which in turn, they can use to breed new Axies to sell on the NFT marketplace.
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With a few tweaks here and there, this baseline P2E formula applies to all blockchain games:
- Resources boost gaming performance
- Resources become valuable and rare
- Resources are tradeable for fiat money due to blockchain/smart contract technology
No matter what kind of tokens the game has, it usually ends up as ETH, the second-largest cryptocurrency behind BTC. It can then easily be converted to regular cash, as all major exchanges support it.
Also, even though some free-to-play games require an initial investment, the rise of free-to-play guilds makes sure that everyone is on the same level.
What Are P2E Guilds?
P2E guilds are typically DAOs (decentralized autonomous organizations) that connect to the player’s wallet. When the player asks for a loan, the DAO treasury releases the crypto funds to the wallet.
By simply playing the game, they pay back the loan as they earn various tokens connected to the same wallet address. Here are some of the more notable P2E guilds:
- Yield Guild Games (YGG)
- Earn Guild
- Play It Forward DAO (PIF DAO)
- Guild Fi
- Good Games Guild
P2E guilds are an excellent tool to start playing without having upfront payment. Although Axie Infinity is still the dominant blockchain game covered, some focus on DeFi Kingdoms, Heroes of Mavia, and hundreds of other upcoming blockchain games.
Earning Potential From Blockchain Gaming Based on NFTs
Many factors contribute to one’s earning potential with NFT gaming. For instance, if user growth is low, there will be less demand for in-game resources (tokens), so their price will be low.
Likewise, P2E games have a limited number of daily quests which can yield rewards.
In the case of Axie, one should expect to see daily $4–$30 income. It will depend on hours put in, one’s deep understanding of tactics, and which kind of Axie NFTs do the battles.
However, even at its lowest earning potential, this income level equals or exceeds minimum wage in developing countries such as the Philippines.
Rising P2E stars can become exceptional income sources as well. For instance, The Crypto Prophecies is a blockchain game in which trading itself is gamified.
As its name implies, players have to predict where the asset price is going to close on a candlestick chart.
In this battle of the trading wits, your playable creatures are Crypto Prophet NFTs. Each one has different attributes, waging the game’s TCP tokens.
The game’s matching system then links suitable players based on the wager size.
Without going too much into the complexities of the game, the earning potential has been steady.
Since the launch of its Battle the Oracle arena, the daily average has been $6.6 if one puts in less than two hours of game time.
2. NFT Flipping
If you don’t have the time to spend hours on P2E gaming, there is always flipping. It means buying an NFT with the intent to sell it shortly after at a higher profit. The difference between that initial purchase price and a higher selling price is where the profits lie.
The question then is, how to pick out NFTs that are likely to appreciate? Make no mistake, NFT flipping is far riskier than P2E gaming.
However, with the right tools, it is possible to attain bigger profits with less time. The critical tool to have is one that measures NFT rarity score.
This is not that different from any other market. Most people either don’t have the time or the inclination to look up stuff on their own.
This is where an entrepreneur jumps in. Specifically, NFT traders specialized in flipping look up NFTs that have rare traits.
Then, it is a matter of properly pricing them in one’s bids. CirrusNFT claims to be one of the most successful NFT flippers, going from 0.6 initial investment to over 150 ETH.
He specialized in two projects — Lazy Lions and Mutant Ape Yacht Club.
The fact that he focused on just two projects makes perfect sense. To understand what each NFT would cost with rarity traits in mind, one has to be intimately involved with every aspect of the collection.
Here are the key takeaways from his success story:
- For profits to be made, an NFT project doesn’t have to rise parabolically. Instead, it just has to have consistent trading volume — liquidity — which denotes steady interest. In turn, interest means flipping opportunities.
- Laser-focus your NFT flipping efforts on just one or two projects. Specifically, those that have been vetted as legitimate and potentially blue-chip, so you don’t fall into a rug-pulling trap.
- Take advantage of the listing page. For instance, Omnimint’s calendar has precise countdown timers for upcoming projects, alongside their social media footprint. The latter allows you to check the project’s legitimacy.
- After using the rarity score tools to learn about the project, you can test how well you can guess the price. With built-up confidence, enter the market when you spot a good deal that others have missed.
No doubt, NFT flipping demands ample time investment. However, once there is enough knowledge of the project and sufficient liquidity, NFT flipping is superior to just “going by the gut” and buying random NFTs in the hopes they will appreciate.
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3. NFT Staking
For those who don’t have time for either P2E or flipping, there is staking. It requires the least amount of effort. You may have heard of staking in proof-of-stake blockchain networks, such as ethereum or solana.
Economic staking is used by these smart contract platforms to keep the network safe and handle transactions. In turn, validators receive rewards as passive income for their trouble. The same principle applies to NFT staking.
Some NFT projects allow for their NFTs to be locked-in for a period of time in return for token rewards. This is a great tool if you don’t intend to move your NFTs but hold them for long periods of time.
Of course, by staking them you don’t lose ownership, so it is the least risky NFT earring method. Here are some of the most popular NFT staking platforms:
- NFTX
- Polychain Monsters
- BAND NFTs (specialized in music NFTs)
- Splinterlands (specialized in CCGs — card collectible games)
Although NFT staking is the least risky, it is still in its early stage. Therefore, yield percentages vary wildly and depend on the project’s liquidity.
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Which Method Suits Your Style?
As the NFT market continues to evolve, it is important to not just focus on grabbing a blue-chip NFT and hoping it goes up. More consistent gains can be had from getting ahead of the curve.
The price paid for that leap is time. Both flipping and P2E gaming require a substantial time investment. Nonetheless, for people in-between jobs, this may be a great opportunity to grow into a job-replacing income.
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