The staking process provides a necessary security backbone within proof-of-stake networks. Since NFTs, staking has evolved to offer holders unique benefits within a project’s ecosystem. However, users have begun to question these supposed “rewards”. Are they sufficient? Or just a tactic of short-term manipulation?
A useful tool? Or a useless function?
While staking NFTs seems enticing, users have begun to wonder if that’s supposedly the case The “benefits” surrounding staking offer real advantages. To go even further, some have even dubbed the process of staking “Ponzinomics 101,” claiming that staking offers nothing but artificial utility and false metrics that result in short-term “FOMO.”
The act of staking has seen a drastic change with cryptocurrency in NFTs. In Proof-of-Stake (POS) networks, “validators” would offer their coins as collateral for a chance to validate blocks. In return, they would be rewarded for doing so. As such, staking means users are risking collateral and maintaining features needed for the continued operation of the network.
Now staking appears to be acting as a placeholder for unimaginative collections trying to discourage their community from selling.
What is staking and is it pointless?
In short, when staking, an NFT is “locked up” either through this NFT project or on an external platform. In return for staking an NFT, holders receive staking rewards. While the value of staking still exists, some projects offer unique benefits to those who continue staking. Although the rewards vary from collection, holders have received additional NFTs as well as landplots to metaverse land which can then be sold on the secondary market.
Thus, staking NFTs allows holders to generate passive income; However, only a few projects have implemented staking “correctly”. Since most projects use staking as a ‘necessary’ phase in development, it will be interesting to see the shift in the perceived ‘usefulness’ around staking in the future as the community begins to change their minds about its usefulness .