NFT renting. What is it, and why is it the next big thing in NFTs
An innovative technology called NFTs is disrupting the digital market. These are coming forward as more and more new ideas. Nifty Renting is a new concept that came out so recently that nothing else can topple it.
Many people have a great desire to buy NFTs but can’t do it because they don’t have enough money for them, and this is an effective way open to them.
Here you can use all the utilities of your desired or prominent NFTs that are listed in the NFT rental marketplaces. How is all this possible? Is this true? Without any further ado let’s get to the point.
What is NFT Renting?
As the name implies, NFT Renting means renting and utilizing NFTs for a certain period. This means you can borrow NFTs for a particular period from any NFT rental marketplace, where the NFT owners list out their NFTs for rent.
This is made possible by a smart contract that acts as a bond and usually requires a small investment. The NFT shall be returned to the original owner at the end of the rental period.
NFT rental marketplaces use DeFi blockchain technologies to facilitate secure transactions, ensure NFT is returned to its owner at the end of the rental period, and make the entire process more efficient.
Why Should You Rent Out NFTs?
Simply put “To earn money” is the only goal of NFT renting.
For the lender, NFT renting creates a financial income stream by allowing them to passively earn money for using their NFTs.
From the borrower’s side, this opens up an opportunity to join the NFT community. However, renting NFTs is an inexpensive way to enjoy the benefits of some high-end NFT utilities without making a significant initial investment.
As a borrower, you don’t need to invest much money to buy NFTs, instead, you can rent them. You can utilize the utilities of NFTs thus rented during the rental period. In short, the benefits can be reaped without much cost.
In other words, most people need NFTs for some particular purpose or only for a short period, for whom this NFT renting is the most effective way.
Benefits of NFT Renting
NFT renting has many benefits. Effective renting methods are also available today that benefit both lenders and borrowers. Here are some features of NFT renting, take a look.
Source of passive income:
For the lender (owner), renting can serve as a good source of income. If any borrower rents out their NFTs, they can earn money.
No need to liquidate to get profits:
Most people cannot afford to buy an NFT. Renting allows them to enjoy the privilege of owning the property without paying more.
You own your NFTs:
Some people may only need or want to use NFT for a short time; Renting allows them access to NFT when needed. It enables them to experience the privilege of NFTs.
Increase demand:
NFTs have always maintained their demand and now with the idea that anyone can use NFTs for rent, their demand is skyrocketing again.
No need for additional storage space:
Additional storage space is required to store purchased NFT. Renting is a way to enjoy the benefits of NFT without having to find storage space.
Types of NFT Renting
There are currently two types of NFT renting, collateral renting and collateral-less renting.
Collateral NFT Renting:
In collateral renting, the NFT owner (lender) lists their NFTs on an NFT rental marketplace such as reNFT or UnitBox DAO, where NFT enthusiasts can lend and borrow their favorite NFTs. If a borrower finds and is interested in using an NFT, they can proceed with the NFT renting process, in which the NFT is embedded in a smart contract and the borrower and lender agree on the terms of the smart contract.
To secure the lender and their NFT, the borrower must put up collateral — more than the NFT’s value. The value of each NFT may be verified using the current pricing listed online. In addition, the tenant will pay a rental fee to cover the cost of borrowing the digital asset.
These terms are formalized in a smart contract that includes the rental period, the amount of collateral required and other mutually agreed upon terms and conditions.
The smart contract becomes effective when both the borrower and the lender agree to its terms and conditions. The borrower now owns the NFT and can enjoy the benefits of ownership for the duration of the agreement. After the end of the rental period, the smart contract becomes inactive and the owner gets their NFTs back.
Collateral-Less NFT Renting:
It is somewhat similar to collateral renting, offering significant benefits to both the asset owner and the renter. This form of NFT leasing does not require lenders to relinquish collateral.
The only difference is that, unlike collateral renting, neither the renter nor the borrower receives the actual NFT. Instead, a wrapped NFT with all the exact characteristics of the original NFT is prepared for them.
If the contract expires, the wrapped NFT that is given to the borrower is burned. The renter or borrower does not have to put up any collateral and neither the owner nor the lender has to part with their original assets. This reduces financial risks for both parties. One such safe renting method is collateral-less NFT renting.
Best NFT Rental Marketplaces to Rent NFTs.
Here we list some of the best NFT marketplaces for renting NFTs. Take an eye on it.
UnitBox DAO
UnitBoX DAO is one of the dominant NFT renting platforms and this NFT renting protocol is based on a revenue-sharing model. UnitBox DAO is a blockchain startup, and they believe that NFT rentals will make it easier for more people to join the P2E economy of the GameFi. UnitBox’s rental systematic structure is still in the testing stage, but DAO intends to allow people to rent without paying collateral. This idea will help the borrowers and is adept through a protocol that creates “wrapped” versions of the NFT that the lender can call back at any time.
reNFT:
reNFT touches NFT hype. Their main objective is to rent out NFTs. What is worth mentioning here is that the platform has even established a partnership agreement with Rareable as the first NFT marketplace with fully integrated reNFT rental protocols.
Technically speaking, to lend NFTs using reNFT, you need to upload your NFT to their listings. These listings are smart contract enabled. The lender determines the NFT price, the length of the lease period, and the rent price. If the buyer is satisfied with it, they can rent the unit. This is the procedural step of the reNFT marketplace.
IQ Protocol:
IQ Protocol is another booming startup in the NFT renting marketplace. Here their goal is to create wrapped or collateral-free NFT rentals. If so, they integrated a tool that includes an expiration date to set the rental period in their smart contracts. The IQ Protocol rental marketplace is not yet fully functional like UnitBox. DeFi risk-free protocol for NFTs and fungible tokens leases without collateral.
Wrapping Up
While NFT rental is a new concept and its growth and development will evolve over time, the demand for NFT rental marketplaces is tied to liquidity and financial use cases. Additionally, NFT rental will empower those who want to participate in the Web3 evolution, even if they love a digital asset but don’t have the financial strength to purchase them.
The NFT renting concept is a first step in which both lenders and borrowers can profit from the web3 world, as NFT lenders can earn from their non-performing assets. NFT borrowers can leverage certain assets for a limited set time to achieve their goals. The creation of this NFT renting is to provide a utility that benefits those who hold and rent them.
