In my recent article, I've discussed a time-proven way of building a passive income - acquiring referrals. Today I'll take a look at a fundamental different concept for building yourself some income on the side - renting out NFTs in your possession. Unlike the hunt for referrals, this is a pretty new concept that's still in its earliest stages. To my knowledge, on Hive this is so far only done by Splinterlands. Nevertheless, I'm convinced that we'll see a lot more of that concept in the future and that it could be another great way of generating passive income.
In this article, I'm going to discuss the concept of renting out your NFTs based on the example of Splinterlands, describe to you how it's done in that game and where I see the huge advantages in this system, and finally give you some ideas how this concept could (and should!) be used for other projects as well.
To understand the following, let me quickly introduce you to Splinterlands first. If you already know the game, feel free to skip this part of the article and continue reading below the game's screenshot. Splinterlands is a collectible card game running on the Hive blockchain. Players face each other in 1v1 matches that each follow different rules and allow for the use of different cards. Once both users have picked the up to 7 cards they want to use for that round, the battle itself is concluded automatically and the winner earns both ranking points and the ingame currency, called DEC.
All cards players own in the game are represented by NFTs that can be bought and sold both ingame and through third party websites. The game is pretty popular in the crypto world and generally regarded as the most successful blockchain game up to date. If you've never seen it before but enjoy card games like Magic the Gathering or Hearthstone, chances are you'll like it a lot. One thing that really sets the games economy apart from basically all competitors is the ability to rent cards from other players and that's what I'm going to discuss next.
So what's the idea behind the renting of NFTs? Since all the cards you own in Splinterlands are represented by a NFT, your options ingame are dictated by the NFTs you own. Much like with traditional physical trading card games, you can only use the cards that are in your possesion. Usually, this means that if you want to use a new card, you will have to buy it from somebody else or trade in some of your cards to acquire the card you need.
Now with renting, this does change quite a bit. Instead of buying the card, you only pay a fee that allows you to use the card, while the NFT itself stays in the ownership of the person renting out the card. This may sound trivial at first, but it's pretty revolutionary if you think about it. Traditionally, trading card games are pretty expensive to pick up. Good/rare cards usually are rather expensive and to acquire all the cards needed for a good deck, you'd sometimes have to pay a small fortune.
On the other side, these kinds of games often attract collectors. Either because they just enjoy holding rare stuff in their possession or because they hope for an increased valuation of the card. Typically, this is how you'd earn money with collectible cards. You buy them, hold on to them for some years and sell them again at a higher rate. Some of the rarest cards from the more successful trading card games like Macig the Gathering or Pokemon are worth absurd amounts of money:
Obviously, cards like these won't ever see any play because their owner certainly would not want to risk damaging the card. In the digital space, this is not an issue. You can't damage your NFT by using it. But only with the concept of renting does it really take off! In the real world, nobody would ever rent out a Black Lotus so that somebody else could use it. What if he damages it? Looses it? Simply keeps it for themselves? In the digital world, none of these are an issue. It actually is a winning proposition for all parties involved:
People on a tight budget can rent these cards comparably cheap and actually play with them while the people holding them can earn returns on the card without having to sell them. Now instead of holding a card for 10 years, hoping that its value is going to increase, you can earn daily returns on that card and still sell it for the same profit if you choose to do so.
From the perspective of passive income generation, this certainly is a dream come true. As long as there's interest in the game, you can keep on earning from your stake in the game without any risk attached to it. At the same time, you can still choose to cash out anytime you want to. In all honesty, this is a real game changer in my opinion and it's something that would never be possible in the real world!
So how is renting handled in Splinterlands? So far, it all happens through a third party tool but the team is actively working on bringing the feature into the game client itself. For now, you have to visit Peakmonsters and log in with your Splinterlands account in order to rent or rent out cards. The process is pretty simple, you just choose the cards you want to rent out, set the daily price and how long you are willing to give it away and that's it. Anybody interested in getting the card can then pick up the deal and from there on you earn daily returns on the rent.
As you can see, the payments for each individual card are only a few cents or even a fraction of a cent daily. For renters, it's a quick and affordable way to pick up the cards they need. But for the people renting out these cards, it certainly adds up! Right now, I have 53 cards rented out, earning me a monthly return of 15$. Now keep in mind that this service is only available through a third party site and even though Splinterlands is the most successful blockchain game there is, it still has a considerably lower player base than most mainstream titles.
So if and once the game takes off, the earnings from renting are bound to increase a lot. To me personally, this is one of the areas in which I see the greatest chances to increase my passive income over the next couple of years. It might still take a while until we see mainstream adaption, but I'm pretty confident that this is one of the features that will help to bridge the gap between blockchain and conventional gaming. I'm also pretty sure that this concept is going to be picked up by other games and services as well.
Obviously, any other blockchain game using NFTs could do the same. But it does not stop there, basically any service that uses NFTs could do the same, for example you could rent and rent out miners for different tokens. This is something that is really unique to the digital space and a concept where blockchain technology really shines.
Personally, I'm really excited for the concept and because of that I invested quite some money into Splinterlands and some similar projects like eXode. It might sound silly to some, but some years from now, renting out NFTs in blockchain games could earn some of us enough passive income to actually make a living off it!
That's all from me today, thank you all for reading and see you next time!
