NFT Rentals — The Gamechanger to bring about Better NFT Adoption
NFT is one of the most talked about pieces of the crypto and digital asset industry and it makes up more than 1/4th of the digital asset industry today. In fact, we could even say that NFT played a major role in bringing about better crypto and web3-related awareness than DeFi or the blockchain industry’s actual marketing efforts. This allowed the NFT industry to occupy a huge chunk of the actual cryptocurrency industry’s overall market cap.
Despite all this, NFT has mirrored its parent technology (blockchain networks) and displayed the same inherent vulnerability — Fragmentation and being limited to a closed environment. NFT has huge potential due to its numerous hypothetical and practical use cases. However, NFTs in today’s market exist mostly in form of art-based assets or are limited to the gaming and metaverse industry. While they do have broader internal use-case scenarios in the gaming and metaverse industry they are yet to fully achieve even a fraction of their theorised use-case potential.
With increased awareness, NFTs are being used in mainstream sports, entertainment and media industries while governments and other private entities are researching ways to take advantage and make use of the non-fungible nature of NFTs. The most popular use cases currently being explored include — NFT for unique ID credentials and for certification/royalties.
What is NFT Renting and Why is it a Game Changer?
NFT Renting as implied by its name is a process by which the holder of an NFT rents out his asset to others. This will allow the owners to earn additional income from their digital assets, while those who are able to rent NFT get an opportunity to experience this particular asset or make use of the NFT.
While most NFTs exist as art forms, there are NFTs which come with a particular use case that would allow the owner/holder of the NFT to gain certain special privileges. But such NFTs are either limited in number or are very costly to purchase/own. Being able to rent out such NFTs would allow the owner of the NFT to earn income based on its special use case allowing them to gain back the cost of NFT purchase partially or completely.
This use case is more evident in the gaming industry as assets in form of NFTs can be rented out by owners or gaming platforms to other players for them to try out that particular NFT (in-game character, cloth, weapons etc). As players would often consider using such NFTs multiple times based on requirements by paying a lower cost as rent compared to paying a higher cost to actually purchase an NFT that they would rarely use.
Similar use-case scenarios can be found in the metaverse where virtual land and event spaces and other metaverse-limited NFTs can be rented out for various users to experience while generating income out of it. Any NFT be it identity or avatar or art form existence or limited edition assets with special use-case can be used for rental purposes.
The advantage of lending out such limited NFTs is that, the renting smart contracts are usually designed in such a way that renting comes along with a limited timeframe attached to it post which the asset reverts back to its original owner. The contract also prevents the borrower from further subletting or renting out the NFTs. This helps prevent theft and loss of NFT making it an attractive source of investment for potential owners as they could use their assets to set up an additional passive income source.
The easily evident prospects of NFT renting include — creating better awareness, helping improve useability and scalability and generating additional income etc., Given the inherent nature of NFT renting, it helps facilitate NFTs to grow and expand in the market while seeing visibly improved adoption in various use-cases. Thus we can consider NFT renting a game changer and an NFT use-case that is here to stay for the long run. Some of the popular dApps that support NFT rentals include -
- Cardinal Labs, Vera, Double and IQ protocols serve primarily as NFT rentals and support chains such as Polygon, Ethereum, BNB, Solana, Arbitrum and Avalanche.
- LYNC & Playdex from GameFi ecosystem in Polygon, Ethereum and BNB chains.
