A Closer Look at How to Make Profit with NFTs
When researching how to buy NFTs, you should pay sufficient attention to the approach you will take to generate a return. Thanks to the growth of the NFT market, there are numerous ways to produce profits through NFTs – whether that be actively or passively.
With such a saturated NFT market, some projects are offering the best NFT giveaways to encourage new users to engage with a variety of NFT collections.
With that in mind, let’s dive in and explore how to make money with NFT tokens by reviewing the most profitable strategies that you can take:
- Invest in Promising New NFTs Early
One of the best ways to make money on an NFT is by investing in promising new collections early before they skyrocket in value. Many of the best NFTs to buy were initially minted at a low price, with their value increasing exponentially in the weeks and months after launch. Some of the best utility NFTs have so much potential to enter mainstream adoption. Check out our guide on the best utility NFTs for more information.
A prime example of this is CryptoPunks, which could be purchased in 2017 for between $1 and $34. When the NFT craze took over in 2021, these ‘Punks’ became incredibly valuable due to their first-mover status within the space. This culminated in these NFTs being purchased by celebrities and other high-profile names – with one Punk even selling for $24 million!
- Play-to-Earn (P2E) NFT Games
Another approach if you’re wondering how to profit from NFT tokens is to take part in play-to-earn (P2E) NFT games. Many of the best NFT games now employ P2E features, which allow players to generate rewards through skilled gameplay. These rewards are usually denominated in the platform’s native token – meaning they can be spent on in-game items or exchanged for FIAT.
Using NFT games to make money has become a popular approach, with numerous exciting platforms springing up that offer a way to generate consistent income. Axie Infinity is one of the most prominent since users can ‘battle’ other users and earn rewards. In addition, since most important in-game items are structured as NFTs, the digital currency earned as rewards can be ‘reinvested’ into better items – leading to increased performance.
Axie Infinity P2E
Investors can also buy Axie Infinity tokens (AXS) on cryptocurrency exchanges to gain indirect exposure to the P2E space. Given the success of Axie Infinity, other projects are beginning to gather momentum, such as Silks, The Sandbox, Decentraland, and more. As time goes on, we will likely see these platforms become more widely used as crypto adoption gathers pace, meaning this trend isn’t going away anytime soon.
- NFT HODLing
One of the best strategies to employ when researching how to make money with an NFT is to invest and ‘HODL’. For those who haven’t heard the term, HODL stands for ‘Hold On for Dear Life’ and was popularized by retail traders during the GameStop short squeeze of 2021. Since then, the term has been used to describe an investment strategy where you simply do not sell – regardless of what happens.
Investors who buy cryptocurrency will know that there are both pros and cons to adopting this approach. However, if conducted strategically, HODLing can be a great way to make money with NFTs. Going back to our example of CryptoPunks, investors back in 2017 may have opted to sell because the value of their Punk was not going up. However, those investors who chose to HODL will have reaped the rewards when prices skyrocketed in 2021.
HODL NFTs
Needless to say, this approach won’t always work, as some NFT collections will not experience the uptake necessary to generate price momentum. However, many of the projects listed on our NFT calendar are already beginning to gather momentum from social media – meaning there could be some great investment opportunities in the weeks and months ahead.
- Flipping NFTs
‘Flipping’ is another effective way to make money with NFTs. As defined by Fortune.com, flipping refers to the process of buying low and selling high, thereby producing a positive return. The critical distinction between flipping and other investment strategies is that flipping is usually a very short-term approach, contrasting with the HODL strategy described above.
Finding the best NFT to make money and then flipping it for a profit is challenging, especially since there is so much competition in the market nowadays. However, it is not impossible – although there are numerous factors to consider when researching how to flip NFTs for profit.
NFT LaunchPad NFTs
The token’s utility should be at the forefront of your mind, as this will be one of the main reasons other investors would purchase it. Community backing should also be considered, along with the development team behind the project. Finally, the visual appeal of the NFT is essential to note, as most investors will wish to display their digital art as their profile picture on social media or via a digital art gallery.
- Minting Your Own NFTs
A common approach for those wondering how to make money on NFTs is to mint your own NFT. Minting refers to the process of taking a digital asset (such as digital art or music) and placing it on the blockchain. Once the asset is minted to the blockchain, it can then be traded on the best NFT marketplaces, allowing you to monetize your creation.
Minting NFTs is a relatively straightforward process, with top marketplaces like NFT LaunchPad making the process easy for beginners. Due to the enormous growth in the NFT market, the competition among creators is intense, with new collections springing up every day. Thus, if you wish to take this approach, you’ll need to ensure that your creation stands out from the crowd.
NFT LaunchPad NFT minting
Assuming you have created your own NFT and minted it to the blockchain, it’s just a waiting game to see if someone buys it. This is where marketing plays an important role, as most collections will not be visible to potential investors unless they are promoted effectively. Once your NFT sells, you will receive the proceeds from the sale (minus the marketplace’s fee), which you can withdraw to your crypto wallet.
- NFT Trading
In a similar vein to NFT HODLing and flipping NFTs is NFT trading. This process is more geared toward making incremental capital gains over the long term rather than getting in and out of the market as quickly as possible. Investors interested in NFT trading will often buy and sell an NFT for a small profit and then repeat this process again and again.
Ultimately, this process requires much more patience and market knowledge than HODLing, as it relies on purchasing undervalued NFTs and then selling them at the right time. However, this can result in exponential capital gains over the longer term, which is why this approach is so popular amongst experienced investors.
- Staking NFTs
Those interested in crypto staking will be pleased to know that this process can also be related to NFTs. NFT staking can come in various forms, although the primary mechanism used is to ‘lock up’ their digital asset on a DeFi platform and receive rewards in return. This usually occurs on Proof-of-Stake (PoS) blockchains and rewards the owner with the network’s native token.
NFT Staking MOBOX
Ultimately, this process helps validate transactions that occur on the network, much like when crypto holders stake their tokens. Since this area of the market is still in its infancy, there are only a few platforms that offer NFT staking – mainly in the P2E gaming sector. Examples of these platforms include MOBOX and Zookeeper.
If you are wondering how to make money with NFTs passively, then this approach is perhaps the most optimal. APYs will vary from platform to platform and depend on the exact NFT you are staking. However, with more NFT projects becoming wise to this flourishing area of the market, we’d expect this process to increase in popularity throughout the year.
- Generating Royalties
Royalties go hand in hand with selling NFTs and form one of the most exciting elements of the market. During the minting process, the creator can set their own royalty percentage, which means that any secondary market sales will provide the original creator with a payment. Most NFT royalty levels are set at 5% or 10%, although some do go higher than this.
Many of the most expensive NFTs will have a royalty percentage embedded into them, which provides the creator with passive income whenever they are resold. Certain NFT marketplaces will cap royalties, usually around 10%, to ensure that these assets are still attractive to future investors.
NFT Royalties
However, creators must ensure that their NFT collections are worth investing in to make the most of the royalty process. There’s no point in setting royalties if the NFT will only be purchased once – so embedding unique use cases or benefits into NFT ownership is crucial to producing a worthwhile income stream.
- Earn Interest on NFT Gaming Rewards
An indirect way to make money with NFTs is to earn interest on the rewards that you make in a P2E game. Like FIAT currency, these token rewards can be placed into crypto savings accounts to generate an annual yield. Often, these yields are far higher than with traditional banks since cryptocurrencies are in such high demand.
AQRU crypto interest
One of the best places to begin earning interest on crypto rewards is AQRU. AQRU is a platform that offers up to 12% interest on crypto deposits with no lock-up period. Furthermore, new AQRU users can receive a welcome bonus of 10 USDT, which can be immediately withdrawn or invested.
Another great option is BlockFi. BlockFi has over 1 million clients worldwide and offers up to 11% APY on a wide range of cryptocurrencies. There are no hidden fees or minimum balances with BlockFi, and investors can receive their interest payments every month.
- Invest in Companies with Exposure to NFTs
The final approach to consider if you’re wondering how to make money with NFTs is to invest in companies that have exposure to these assets. If you buy stocks in these companies, you will receive indirect exposure to the NFT market, which allows you to benefit from its growth.
Given that the market only really took off in 2021, there is a limited number of companies that provide services related to NFTs. Coinbase is perhaps the most prominent company involved with these digital assets and is developing its own NFT marketplace, set to launch soon.
Coinbase NFT marketplace
Some of the best metaverse stocks will also be related to NFTs. Meta Platforms leads the way in this regard, although companies like Roblox and Nike have also ventured into the NFT market. Overall, this approach will likely become more popular as the market expands, presenting an exciting opportunity for equity investors.
We recommend eToro as the best place to invest in NFT stocks due to it’s wide range of stocks to buy, 0% commission policy, and innovative copy trading tools.