NFT RENTING

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NFT RENTING

NFT RENTAL

All over the world, the concept of renting denotes pay-to-borrow. Before renting can take place, someone has to own the item and also put it out for rent. Different items can be rented out. Cars, residential apartments, event centers and even working equipment. Virtually everything can be rented out. When people rent assets, it’s because they don’t have those items and they would love to make use of those items for a stipulated time as agreed upon.

In the cryptoverse, digital assets can also be rented out. One of the newly rented digital assets is NFT. Yes, NFTs.

Now, what’s NFT renting and how can you put NFTs out for rent or even rent them?

WHAT IS NFT RENTAL

NFT rental describes a process where you as the real owner of an NFT rent it out to another person who doesn’t own one but would either like to use it or experience it for a limited time. For every time you loan your NFT out, you get paid. This is a new concept developed by team founders who are committed to building full-blown Defi protocols for lending NFTs. You can rent an NFT or put yours out for rent only on relevant platforms that support NFT’s rental.

People rent NFTs for different reasons ranging from art exhibitions to exclusive membership access to gaming and a host of others. The larger percentage of people who rent NFTs are gamers who rent these NFTs to use in their game as it is a prerequisite for some games and a means of an upgrade for others. In actual practice, the execution takes place via two major methods; collateralized lending and collateral-less renting.

COLLATERALIZED LENDING

For collateralized lending, you have to list your digital assets on a relevant marketplace assigned for NFT lending. When the renter comes across your NFT and initiates the borrowing process, your NFT is immediately deposited into a smart contract and the terms of the agreement will be defined to both you and the renter.

To protect you and your asset, a stated amount will be paid to you by the renter as collateral. This amount is likely to exceed the value of the NFT that is about to be rented. In addition to the collateral, a renter fee will be paid if you’re the renter to cover the cost of borrowing the NFT. Other important detailed information will also be asked such as the duration of the rental and the terms and conditions to be agreed to. All these are still within the smart contract.

As soon as all the necessary conditions and parameters of the rental have been met, your NFT goes to the renter who now has full access to the NFT until the duration elapses. When the contract expires, the smart contract returns your NFT to you since you’re the original owner. The process is completed when the deposited collateral gets returned to the renter.

COLLATERAL-LESS RENTING

Just like its name, you don’t. need to deposit any collateral before you can rent an NFT if you want to rent. This process is also similar to the first with just a few discrepancies. Just like the former, you. list your digital asset in a marketplace that supports renting. Also just like the former, it’s until an interested renter initiates the borrowing process that your NFT gets deposited in the smart contract with the terms of the contract defined between you and the renter.

Unlike the former, after the initiation of the borrowing process, you will not have to deposit a collateral. Instead, a wrapped version of the originally minted NFT gets deposited after all agreements have been met. This wrapped version had the same features as the original NFT and it has the same utility. You as a renter has to agree to all the terms and conditions and pay the rental fee and incentives before the smart contract sends the wrapped NFT. After the conditions have been met, the wrapped NFT is sent to you.

When the smart contract expires in terms of duration, the wrapped NFT gets retracted into the smart contract and is burnt upon arrival. The incentives which were paid before the execution of the contract are the earnings of those who stake the assets into the renting pool.

This method benefits both you as the owner and you as the renter. For you as the owner, this method offers an option where your original NFT never gets to the renter and for you as a renter, there is no need for a collateral fee. This mitigates the risk on your financial assets.

In sum, most people who need an NFT for a short time prefer to rent since it’s more economical than buying it outrightly. NFT rental marketplace makes use of Defi-like blockchain protocols which enables safe transactions and also ensures that your NFT is returned to the appropriate quarters. Some of the rental marketplaces are Vera, reNFt, Trava NFT and IQ protocol.