NFT Renting: Lowering the barrier of entry

NFTs are unquestionably here to stay as more use cases and adoption come into play. In this article, we take a closer look at NFT renting; A concept that may very well be the next significant milestone on the path to NFTs being broadly adopted.

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@enter.artPUBLISHED 22ND DECEMBER 2022

NFTs are currently elevating digital art to a new level and opening up a wide range of opportunities for both artists and the general audience. Both artists and non-artists can purchase or sell digital artwork and then receive a unique ID proving they are the sole owners of the art piece.

Many individuals want to explore and invest in the NFT space but need help due to the high cost of most NFTs, particularly those from larger projects. However, NFT renting may be the best course of action to address this problem and bring in more users to the NFT ecosystem. This new development allows everyone to enjoy various collectibles and NFTs, including their utilities, without paying a lot to purchase them.

As the NFT industry is thriving, NFT renting could be the next significant milestone on its path to being broadly adopted. It might serve as a primer for the incredible things that NFTs are about to make possible.

What is NFT Renting?

NFT renting is precisely what it sounds like. It is a new development that enables users to lend their NFTs to others so they can take advantage of the utility and enjoy the benefit of having the Non-Fungible Token (NFT). 

In the same way that we rent out cars, houses, DVD players, clothes, and other items in the real world, the digital space can employ similar techniques. Here, users can rent out their digital lands, wearables, game weapons and other items for a specific time. 

For instance, if an artist needs a digital land or platform to host an event, they can rent a digital space for the duration of the event for a certain fee, and after the event is over, the owner of the land or platform gets the land back. Or, as a gamer, you can short-term rent a suitable game weapon to improve your gaming experience and keep completing your games. Smart contracts are used to carry out all of these operations on-chain.


How to Rent NFTs

Collateralized Renting
Owners can list their NFT in a marketplace with integrated borrowing and lending features. The borrowing procedure, which entails placing the NFT in a smart contract, would be started by individuals or renters interested in the NFT. Next, both the lender and the renter would agree to the smart contract's conditions. Once both parties accept the terms, the rental process can begin.

To guard the lender's interests, the renter must deposit collateral worth more than the NFT. In addition to this, the renter would also pay a rental fee. The NFT would be restored to the original owner (lender) after the contract ends, while the renter would receive their collateral back.

Collateral-less Renting
Collateral-less rent adheres to the same process as collateralized rent. The contrast in this instance is that the renter does not get the original. Instead, they get a wrapped NFT. The features of this wrapped NFT are the same as those of the original, minted NFT for the renter. The wrapped NFT is burned at the end of the contract. In this case, neither the lender nor the tenant must put up any collateral.


Why Would Someone Rent an NFT?

There are several reasons why people rent NFTs, despite how they may appear.

Source of Income
On the lender's end, renting can be an additional source of income. Lenders can levy renting fees for the borrowers to utilize their NFTs or collectibles. Also, instead of just letting the NFTs sit in the wallet unused, they can earn crypto by renting it out.

The Highly Priced NFTs
Many collections have high pricing, making even the cheapest NFT unaffordable for an average person. This has been a barrier for some people interested in the industry, but the renting approach resolves this. People with little liquidity can rent the NFTs for a limited time and at a considerable price reduction since the renting price will differ from the actual cost of the NFT. Without having to make a significant initial investment, they can own and utilize the NFT asset for some time. 

The Need for Flexibility
Renting NFTs is an option for people who want to avoid buying or owning an NFT asset for a short period. In the case of the borrower, they rent NFT assets to utilize them for a brief time. For instance, a gamer who requires a specific piece of weaponry but doesn't want to purchase it can borrow the weaponry and use it for a set time. NFT rentals are a convenient and affordable method to enjoy some utilities.

The Desire to Try Before Buying
NFT renting can help investors choose the ideal asset to buy since the investor gets to rent the asset first, enjoy its use cases, and recognize its value before purchasing it. NFT renting can help investors choose the ideal asset to buy since the investor gets to rent the asset first, enjoy its use cases, and recognize its value before purchasing it.  


A Sample of NFT Renting Possibilities

The crypto industry is developing, and NFT renting has introduced one of the juicy things that can aid in this process. The NFT rental market will give individuals in the NFT sector access to different opportunities. Imagine being able to enjoy expensive NFTs utilities without having to pay a lot of money or consider collecting passive income while your NFTs are at work. Numerous possibilities can be created by NFT renting across several industries.

1. The Gaming Industry
The gaming industry is frequently one of the first to adopt new technology and its methods of operation. With the introduction of NFT rentals, this trend continues. Players used to spend hours playing and acquiring game items without ever being able to monetize them. With the emergence of NFTs and NFT rentals, this alters even more. Unlike when they let it sit idly on the platform with no use, gamers may now take their game assets to a marketplace and sell them for real money. They might also make money by renting them out on a platform that allows NFT borrowing and renting. Swords, amulets, firearms, and other digital game assets can all be rented out. All of this enables you to earn money while you sleep.

2. The Growing Metaverse
The necessity for avatars in the virtual world will increase as the metaverse evolves. There will undoubtedly be an increase in avatar rent in the years to come. In the future, avatars will develop in complexity, donning various outfits and carrying a variety of accessories. Avatars will be available for rent from individuals or platforms to those who require them for a short period or who cannot pay the avatar's initial cost, which should help to increase adoption.

Much like how people buy physical land in the real world and rent it out for events or activities, the same technique is used in the metaverse. Early adopters are acquiring land in the metaverse, so an NFT land rental market should continue to develop as the metaverse expands and thrives. People who wish to spend more time in the metaverse will rent land to carry out specific tasks, launch a business, or even hang out with friends in a rented virtual residence. 

3. The Art Industry
More works of art will be worth a lot of money in the coming years as artists continue to establish themselves in the industry. Some of these works of art will be expensive or out of most people's price range. The recent introduction of NFT renting can reduce the impact of this development as people can rent NFT art for a limited time and at a lower price.

4. Music NFTs
Nowadays, music is essentially a free item to consume owing to music streaming services, while the creators of these works only receive pennies. But there has been a growing buzz about music NFTs ever since the invention of NFTs. Music NFTs are certificates of ownership used to prove who is the rightful owner of a piece of musical work. This gives music creators complete control over their content and allows them to efficiently monetize their creations. 

Artists can now charge fans to access their content if they do not want to make it available on streaming platforms for free. Fans who intend to enjoy a music video may be able to purchase it from the artist or another seller who owns the music NFT, or they may take advantage of the opportunities provided by NFT rental by renting the music NFT straight from a holder for a limited time. This way, the creator gains the benefit of making money from their creations, while the fans enjoy and support the artist's work.

Conclusion

NFTs are unquestionably here to stay as more use cases and adoption come into play. As a means of lowering the entry barrier into the NFT ecosystem and providing everyone with the opportunity to confidently onboard into the NFT industry, the demand for NFT rentals will only grow. It fosters a new economy within the NFT ecosystem as opposed to when NFTs lie dormant in a wallet. Soon enough, you will be able to rent a car or some clothes to attend virtual concerts and events.


This article is written by Ahuzi Vincentia as a part of enter.blog's bounty program. Do you have an interesting topic, series or subject you think would be fitting for enter.blog? 

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