Even though NFTs are very well adopted in Web3 by celebs, businesses, and individuals, crypto pundits believe NFT Renting will bring blue-chip NFTs to the masses.
Conceptually, NFT renting is simple. Individuals who do not own a particular NFT, but would either like to use it or experience it for a limited time, may go out to a relevant platform that supports NFT rentals, and rent it.
There are several reasons why people would rent NFTs and we believe we are still early to fully articulate the “point of renting the NFTs”. From the additional source of income to the desire to try before buying, NFT renting offers a lot of commercial goodness with a fraction of the costs and risks.
Types of NFT Renting
The NFT rental industry provides access to individuals who cannot otherwise afford a specific NFT, similar to renting an apartment on Airbnb for a week.
NFT Renting is closely related to NFT Lending and Borrowing, in which Liqd excels.
In collateral renting, NFT owners place their digital assets on a market that allows NFT enthusiasts to lend and borrow. If a renter finds and has an interest in using an NFT, they can proceed with the NFT renting process, in which the NFT is embedded into a smart contract, and the borrower and the lender agree to the contract's terms.
On the other hand, in a collateral-less renting arrangement, a wrapped version of the original NFT is minted. This wrapped NFT carries all of the same characteristics and attributes of the original asset and is backed by the original asset. The wrapped NFT hence acts as an interim proxy and is issued on behalf of the original owner.
NFT Renting Use Cases
Metaverse and Gaming
The gaming industry is one of the first adopters of new technologies and ways of working, and this trend continues with the advent of NFT rentals. NFTs allow players to take their in-game assets to a marketplace and sell them for real earnings. From digital swords to in-game swag, there is nothing that a borrower cannot rent so long as the object is represented as an NFT. As early adopters begin buying up land parcels within the gaming and metaverse-focused platforms, an NFT land rental industry may soon emerge allowing future participants in these economies to set up the necessary infrastructure to enjoy their time online, creating digital landlords and NFT land renters.
Music and Digital Content
Music streaming services have made music a free consumable good, with artists earning fractions of pennies. However, the rise of NFTs is giving content and music creators some of the content control they have long been missing. NFT music files and music videos will soon be available to the masses, and artists who do not wish to drop their latest singles "for free" on streaming platforms will require their fans to pay to listen to their content.
Music videos will no longer be posted for free, but gated via limited edition NFTs. Fans who wish to view the music video may purchase them directly from the artist or from another seller, or they may leverage the possibilities enabled by NFT rentals. Finally, a business model where the creator benefits and the fan can directly support the content creator can come to life.
Digital art has become increasingly popular in 2021, with Beeple's collections bringing in more than $100 million in sales and introducing it to the mainstream. Other artists are also making their mark, with some selling their pieces for hundreds of thousands, if not millions, of dollars. Owning one of these art pieces is out of reach for most individuals, but with the advent of NFT renting, users with a modest income can rent one for a day, for example.
CryptoPunks, Bored Apes, and more NFT avatars were the big winners in 2021. With the emergence of the metaverse, an NFT lending economy focused on avatars is likely to arise in the coming years. Other NFTs, such as traditional and rental, will also take off.
In conclusion, NFT renting is a game changer for the NFT space that not only opens up doors for individuals who are yet to own an NFT, but also for individuals looking for more ways to make an income. Whether it's through collateralized or non-collateralized lending agreements, NFT renting will be sure to increase the adoption of blue-chip NFTs and help create further the thriving NFT economy.