By now, it’s no secret that NFTs have taken over a major portion of the art world. By rewarding artists and making sales more efficient and setting up utility purposes, NFTs have truly shown their potential. How the web 3 world works and how people are rewarded for buying and holding NFTs can be very different to some of the more traditional ways most people are used to.
However, what many may not understand is that there are things that are already becoming traditional even in the NFT world. Among them is the method of “staking.”
Staking is simply the procedure of rewarding NFT holders of a project for locking away their NFTs. In short, the holders ‘lock’ their NFTs on a staking contract and get rewards in return for doing so. This keeps the holders happy because they get free rewards, and it keeps the company happy because NFT holders don’t sell the NFT. This then raises prices in the secondary market. All in all, it creates hype and demand for the NFT. However, this process is getting old, and NFT creative house Ukiyo has built a smoother, more effective and more efficient way around it.
Ukiyo is the parent company of Tsukimi, where they are introducing their new staking method called Loft Staking. However, before diving into Ukiyo’s new revolutionary idea it’s important to understand what staking really is and how it works.
As mentioned, staking is the concept where NFT holders of a given project are rewarded. Staking falls within the ‘utility’ of a project. These rewards can be airdrops, character skins, bonus loots, or anything else that makes them want to keep the NFT. When the NFT is kept locked away in a staking pool, it raises its price on the secondary market raising its demand and keeping the supply down. Not only does this add price to the NFT but also creates hype, desire and prestige for the project.
However, recently, traditional methods of staking are not living up to what people expect. Gas fees are a major issue which makes the entire staking process expensive and discourages people. People can end up paying tens of dollars for the gas fee alone for staking, unstaking and minting rewards. Secondary sales are also negatively affected by traditional staking.
For a potential investor, the number of holders of a project is a crucial sign they look at while making their decision. However, with traditional staking, where holders transfer their NFTs onto a staking contract, the holder count is negatively impacted. How? Well, as most holders move their NFTs from their wallet onto the staking contract, the contract itself becomes a ‘holder’. So, in a project of 10,000 NFTs, where 9000 have been ‘staked’, they are now essential held by ‘one wallet’ which, is the wallet of the staking contract.
leads to the low head count and therefore discourages people from buying the NFTs of a given project. A low count negatively impacts the sales on secondary market, which further pushes down the price of the NFT.
Ukiyo has introduced something they call Loft Staking. With Loft Staking, the worry about wallets and gas fees goes away completely. In this way of staking – you do not have to transfer your NFT to a staking contract. You keep the NFT in your wallet – and for as long as you keep it, you keep getting rewarded.
So – no more transferring the NFT to a staking contract. No more gas fee. None of that. You hold the NFT in your wallet. And you keep getting rewarded for it. The entire process is gamified as well. As you keep holding on to the NFT, you unlock more perks and benefits. Longer hold times will give you more powers within the project – give you governance rights and seats. And – for the super holders that have multiple NFTs in their wallet – they get exclusive bonuses and more!
In short – the entire process is not only gasless, but, let’s the holders have full control of their NFTs – while ensuring a high head count of holders to stay attractive to secondary market investors.