Understanding NFT Staking: How It Operates and Its Advantages

NFT staking typically requires the implementation of the following smart contracts:

1. NFT Smart Contract. The subject of staking.
2. Staking Smart Contract. The storage for NFT smart contracts.
3. Rewards Smart Contract. This could be a token of any standard: ERC-20, ERC-721, ERC-1155.

To stake an NFT, the owner must transfer it to the Staking smart contract. After that, the reward will be available according to the rules described in the Staking smart contract. For example, for one "staked" NFT for a year, the user receives an ERC-20 token equivalent to $100.

The reward or privileges are incentives designed to attract owners to "stake" their NFTs instead of just owning them.

Important! The implementation of specific cases may provide off-chain privileges instead of token rewards. For example, a pass to a blockchain conference. This means that the Rewards smart contract may be absent in this scheme. I think you can figure out other variations yourself 😅

When the reward can be quantified, e.g., an amount in ERC-20 tokens, a transparent system for accruing rewards is needed.

Such a system can depend on several factors:

• Duration of staking. The longer the NFT is "staked", the greater the potential reward.
• Interest rate. Different platforms may offer different interest accrual forms: fixed rate, variable rates, rates depending on activity or completion of special tasks, etc.
• Total amount of staking. The total number of "staked" NFTs can affect the reward size.
• Rarity or property of the NFT. Different NFT metrics can affect the reward size. For example, a rare NFT may yield higher rewards than a common one.
• Network fee. Gas fees for claiming rewards can negate any passive income.

Like everything in this world, NFT staking has its pros and cons.

In this section, I will describe four examples of smart contracts that solve various NFT staking tasks.

Important! These smart contracts are created for educational purposes and have not undergone an audit.

The Simplest NFT Staking

To implement the simplest NFT staking, one smart contract is needed, let's call it SimpleStaking.sol which will regulate three main processes:

• transferring the NFT to the contract
• retrieving the NFT from the contract
• checking that the contract owns the NFT.

At the moment of transferring the NFT to the contract, it is necessary to record the real owner of the NFT, so that later, only they can return it back. For this purpose, I declared two variables:

To check if an NFT is staked, you can call the ownerOf(tokenId) function on the lpNft contract (which returns the address of the owner) or ownerOf(tokenId) on the nft contract (which returns the address of the SimpleTransferableStaking.sol contract).

The full code of the SimpleTransferableStaking.sol contract can be found here.

The fundamental difference is the introduction of the following concepts:

• rewardToken - this is the token in which the reward will be paid
• _stakeDuration - this is the time for which the NFT needs to be staked
• _rewardAmountPerNft - this is the amount of reward for one NFT

We change the stake() function. Now it's important to store information about the NFT stake (start time and duration).

The unstake() function calls the _claimReward() function to send the reward token.

The full code of the StakingWithOneTimeReward.sol contract can be found here.

I will set a reward amount on the contract that the owner will receive if one NFT is staked for exactly one year, _annualRewardAmountPerNft;. From this amount, we will calculate the reward for any period of time.

It's necessary to calculate (update) the amount of the reward due at any interaction of the NFT owner with the smart contract. This will be handled by the updateReward() modifier and the private function _updateReward().

I'm applying the updateReward() modifier to the stake(), unstake() functions, so the earned reward will be calculated first, and then the action of the NFT owner will be executed.

The calculation of the reward will be very simple. The amount of the reward is calculated for a specific period of time based on the annual reward amount for staking an NFT.

The full code of the StakingWithReusableReward.sol contract can be found here.

The platform implemented a sub-service, NFT PowerStation for "recharging NFTs," which allows earning rewards in Binance fan tokens. Rewards are distributed from a predefined pool of tokens. They are allocated based on various factors: type of NFT, number of participants, etc. The longer the NFT is "charged," the higher the rewards. Rewards are calculated hourly.

Staking and NFTs are two important concepts in the web3 world. Often these two technologies are used separately, but NFT staking rethinks the use of NFTs and creates new use cases.

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