Exploring the Meaning of NFT Farm

NFT farming is a new concept in Web3 that merges DeFi and NFT technology, allowing NFT holders to earn a yield on their tokens.

What Is NFT Farming？

Before discussing what NFT farming is, lets first define what NFTs are and briefly describe yield farming.

NFTs are digital tokens recorded on a blockchain that represent unique digital or physical assets like digital art, music, or even physical assets like real estate. Yield farming, on the other hand, is the practice of depositing crypto assets in a decentralized liquidity pool to receive rewards paid out in tokens.

With the boom that the NFT and yield farming experienced independently, it didnt take long before developers blended the concepts of NFTs and yield farming to create NFT farming (or NFT yield farming) as a way for NFT owners to generate income by deploying their NFTs in the DeFi market.

NFT farming involves staking NFTs in exchange for a reward in tokens or staking tokens to earn NFTs as a reward. Unlike traditional yield farming, where you have to deposit crypto assets into a liquidity pool to earn tokens as a reward, NFT farming uses NFTs rather than fungible tokens.

NFT yield farming enables NFT holders to create liquidity and utility for their NFTs, which would otherwise be considered illiquid digital assets.

When DeFi Meets NFTs: How Does NFT Farming Work？

The NFT farming process differs slightly from platform to platform, but in general, it involves staking an NFT in exchange for token rewards or depositing tokens to receive rewards in the form of NFTs.

NFTs, or non-fungible tokens, exist on multiple blockchains, including Ethereum, Polygon, and Binance Smart Chain. These digital assets follow certain standards, and can therefore be used in a variety of applications. This means that an NFT is interoperable. Interoperability means that different systems can connect, or in this case, one digital asset can connect with multiple programs or smart contracts.

To get started in NFT farming, users will need a cryptocurrency wallet. Metamask would be the one wed advise to connect with the Ethereum blockchain, Polygon, or Binance Smart Chain. In that wallet, they will need a certain token, dependent on the platform. They then need to stake this token in a pool. Users earn rewards based on their proportion of the total pool.

A common concept in this scenario is the staking portal. A staking portal is where you can turn compatible NFTs into vaults from which you earn rewards. A good example of a staking portal would be the $MEME Genesis Farm. Here, users are allowed to stake free MEME tokens to farm limited edition NFTs which can then be sold on NFT marketplaces such as OpenSea or Rarible. The MEME tokens allow a user to generate reward information about pineapples which can then be used to claim the NFTs.

The most common place to farm NFTs are blockchain games. Here, users can stake in-game items (in the form of NFTs) and, in exchange, earn the games token. On the other hand, they can also stake their tokens and receive NFTs.

Axie Infinity, for instance, is one of the most well-known blockchain games that offer NFT farming as a feature. In Axie Infinity, players get to earn SLP tokens, which they can use to mint NFTs in the form of new Axies.

The Twist in NFT Farming

NFT farming also includes some processes of gamification. This is sometimes referred to as gamified NFT farming. It involves adding a sense of competition and layers of video games to yield farming. It functions well in play-to-earn games, where gamers earn tokens and NFTs through gaming activities. Rules and earning models differ according to each game's structure. It only requires basic gadgets like a desktop and an initial investment to get some in-game purchases to kickstart with the fun-filled earning.

Gamified NFT farming

An upcoming trend in yield farming and NFT farming is the gamification of the process. Gamified yield farming or NFT farming adds a video game layer to the process of yield farming. Products like Alien Worlds and Cometh add a gaming element and sense of competition to the concept of yield farming. Even more interactive is the game Axie Infinity, where players earn in-game SLP tokens that they can then sell for money or use to create new NFTs. These new NFTs will be Axies, and players can monetize these creatures in different ways.

Players can use Axies in battles and generate more Smooth Love Potions (SLP), which are tokens with real value. Or they create more Axies to breed more Axies. In addition, players can simply sell their newly created NFT on the marketplace.

On Binances Smart Chain we‘re seeing many yield farming platforms that tap into NFTs. In the examples below, users will first need to acquire an NFT with a certain power before they can start farming and tokens. In these cases, NFT serves as a yield farming boost. It’s another way of combining NFTs and DeFi.

Features of NFT Yield Farming

It suggests a sort of investment that yields money by extending credit through smart contracts or by mining liquidity by depositing NFT tokens into a pool (lending). Selling an asset fast and at a profit is what is represented by the term “liquidity.” An asset is deemed to be more liquid if it can be sold quickly and easily.

Due to the high liquidity of a DeFi platform, both buyers and sellers are interested in the asset. A liquidity pool is considered a smart contract on decentralized exchanges. It serves as a form of token storage that facilitates trade. The money that is blocked on the smart contract account is utilized for trading and various exchange operations.

Accordingly, yield farming is a method that enables you to boost your profit by offering a pool of liquidity with money that other users would trade. Exchanges reward you further in return for this. A project investment of this sort. Simply put, lending entails lending out coins for transient use.

As a result, you lend cryptocurrency to a platform, which will disburse the money and guarantee its return, in exchange for interest. The parties have agreed on the timing and also the sum of the asset that is returned to the lender. So, yield farming with NFT offers you a new way of income without requiring your active participation.

Features of Gamified NFT Farming

The P2E model has gained a lot of traction among owners of digital assets during the past year. A new phrase for video games where players can earn cryptocurrencies and NFTs through their gameplay is “Play to Earn.” Each special token, such as a character, card, item, or feature, is typically unique and has a distinctive value.

To enhance, sell, or trade these NF tokens with other players, the user can gather them based on the rules of a particular game. The user has other options, including the ability to withdraw the money they have earned from these activities, convert it to another currency, utilize it for other endeavors, and much more.

It is important to remember that games that utilize NFTs appear in a variety of styles, from simulations to arcades, with any theme and level of sophistication. Players who participate in such projects are frequently rewarded for daily completion of easy chores and tests. Tournaments and bets are another way to restock your wallet.

All you need to play P2E games is a smartphone or access to a desktop computer. Purchases of the first non-fungible tokens, such as characters, cards, or other in-game objects, are considered first investments.

Nevertheless, this kind of cryptocurrency income is regarded as rewarding and enjoyable. After all, you have the chance to accomplish things that you know will make you happy while earning some perks that can be converted into actual cash.

Since each NFT farming platform has its unique characteristics, it is quite difficult to say which one is the best. The most interesting and promising initiatives for 2022 are displayed in the list below.

Best NFT Farming Platforms

Bunicorn.Finance

In this game platform, decentralization, blockchain technology, and NFT gamification are all combined. The service's standout feature is a novel method of mining for liquidity. Tokens in the project have a defined lifespan, preventing their immediate disposal after being given assets by the mining pool.

The BUNI token is exclusive to Bunicorn. It allows users to receive rewards for wagering and taking part in platform administration.

By receiving a portion of the fees collected on the Bunicorn decentralized exchange, they can purchase the tokens. Participating in a role-playing game with a visual style that vaguely resembles the popular Pokemon series is another option to obtain the tokens.

MOBOX

The MOBOX gaming platform has a distinctive infrastructure that unites a variety of games from various genres, as well as the NFT marketplace, yield farming prospects and much more.

Users can, for example, acquire tokens through gaming, stake them for greater profits, or rent out their NFTs and participate in MOMO mining. The ability to vote on modifications to the platform's functionalities is also available to holders of native tokens.

Pulsar Farm

In this project, you'll also find blockchain gaming integrated into many PvP and PvE games, NFTs that take the form of alien pets and yield farming that lets you earn tokens. The technology creates two different token types—Gamma Pulsar and Gamma Bounty—both of which may be exchanged or added to liquidity pools.

Players can also earn awards and passive revenue while completing thrilling missions and taking part in entertaining battles by leveling up a character or rising to the top of the scoreboard. A notable feature of the platform is the insurance plan it provides to safeguard players' investments.

Zookeeper

Wanchain is the foundation of the following intriguing and lucrative project. It now uses NFTs and gives its players access to ZOO and WASP tokens. To increase rewards, a liquidity pool can be connected to by Zookeeper's NFTs.

The “zoo” has a huge range of activities. If you have the necessary funds, you can choose a pair, set a blocking period, purchase various goods, and much more. You can also select from various liquidity pools.

The Power of NFTs in Agriculture

1.Provenance and Traceability: NFTs can be used to establish a clear and transparent supply chain, from the origin of a crop to its final destination. For instance, an NFT can represent a specific batch of produce, with the token carrying information such as when and where the crop was grown, how it was harvested and transported, and its carbon footprint. This transparency could boost consumer confidence and allow them to make more informed purchasing decisions.

2.Tokenization of Assets: Farms or agricultural land can be tokenized using NFTs, with each token representing a share. This could allow farmers to raise capital by selling tokens, while investors could earn a return on their investment through a share of the farms profits. This method could make investing in agriculture more accessible to a broader range of people.

3.Smart Contracts and Automation: When coupled with smart contracts, NFTs can help automate processes in the agricultural supply chain. For example, a smart contract could automatically release payment to a farmer once a batch of produce has been delivered and verified. This can help to reduce delays and improve efficiency.

4.Promoting Sustainability: NFTs can also be used to reward sustainable farming practices. Farmers who adhere to certain sustainability standards could mint and sell NFTs representing their commitment to these practices. These tokens could then be bought by consumers or investors who wish to support sustainable farming.

5.Direct-to-Consumer Sales: NFTs could facilitate direct sales from farmers to consumers, bypassing middlemen. This can lead to fairer prices for both parties. Farmers could mint NFTs representing a certain amount of their produce and sell these tokens directly to consumers.

Benefits of NFT Farming

Earning money versus purchasing NFTs is like comparing apples to oranges because the driving forces and mental processes are so unlike. Users who want to earn NFTs can do so by staking assets they already own, so they don't have to spend any of the hard-earned cryptocurrency or fiat they've saved up for it.

This procedure may resemble an interest-bearing savings account in some ways, but rather than earning an APY, you might get a collectible or a utility-based NFT. These NFTs can include works of art, virtual goods, rewards for token owners only, and many other things.

Users now perceive non-fungible tokens using a whole new paradigm as a result of giving out NFTs as rewards rather than selling the product. The benefits of NFT Farming are given below.

NFT Farming Benefits for Users

NFT farming might create a win-win situation for all parties involved since it benefits both project creators and the end users equally. They do so in very different ways, though. Let's start by discussing the advantages that NFT farming offers to token holders and end users.

The advantages of NFT farming for token holders are a lot. Many users keep tokens inactively in their wallets, hoping that their value will rise as the popularity of their particular networks increases.

This is the equivalent of hiding your fiat money under your mattress, where it is unable to assist you in creating any further value. By using NFT farming, you can make your tokens work for you to earn rewards rather than letting them sit around doing nothing.

As previously stated, these prizes may take many different forms, but they can often fall into one of two major categories: collectible and utility-based NFTs.

These many collectible NFTs, which resemble traditional physical and distinctive trading cards, vary in value based on their provenance and market demand, with some collectibles holding their worth over time.

Imagine, for instance, that Binance allowed users to stake BNB and earn NFTs as soon as BNB was released. The initial NFTs produced by Binance would likely be very collectible and in high demand, which would likely increase their price as the platform expanded.

Users can earn utility NFTs in addition to collecting NFTs for collections. These NFTs may take on a variety of shapes, where the main variation depends on what the project's creators want to provide as a reward to its user base.

Through NFT farming, these opportunities have become more accessible to regular users, depending on what NFT farming and NFTs might offer their users. Qualifying for highly coveted IDOs has become extremely exclusive, and this was the case before too.

The value proposition behind these NFTs is pretty evident since users have the opportunity to sell or trade their allotment NFT on the secondary market if they earn it but do not wish to redeem it.

NFT Farming Benefits for Project Developers

There are numerous advantages supplied to project creators that they won't get from more conventional staking techniques. For starters, by offering large payouts to stakes, the project may avoid further depleting the number of its tokens.

Projects now have the option to utilize the native tokens that were previously reserved to stake rewards for other purposes. However, this option is still available since the native tokens can be packaged into an NFT to make them earnable by users.

The capacity of the project's developers to bind up the liquidity of its native coins is an important consideration. The tokens cannot be exchanged when they are staked by a user in an NFT farm since they are being used.

This puts projects in a stronger position in terms of token pricing and demand because sell-side pressure may be lessened as long as users are staking to earn NFTs.

The price of a token should supposedly increase if there is consistent demand for it but a reduced supply as a result of circulating tokens being locked up in an NFT farm.

Risks in NFT Farming

It will be over-hyped if NFT farming is all good with no potential risks. It follows through with the risks of cryptocurrencies' volatility and price fluctuations. The most significant risk it poses is in its structural components. The composability of NFTs could pose a risk if problems arise in one of the building blocks. A failure in a single block risks the entire system tumbling down. Aside from this, loopholes in smart contracts could also be another potential risk in NFT farming.

NFTs started as unique digital art collections but have been utilized in many ways and sectors. They are an important tool in the digital revolution since they digitally represent originality. They have made waves in fashion, music, entertainment, virtual real estate, gaming, and more industries. As their adoption grows, so do their utilities. NFT farming is a new phenomenon that makes earning easy and more fun-filled for NFT holders. They don't need to be a bonafide owner of online assets but can easily earn through staking, lending, or even participating in gaming activities.