What do NFT Rental protocols look like?

What is NFT Renting

The infrastructure to rent NFTs for a limited time is provided by NFT rental protocols. They permit the transfer of NFT user rights without transferring ownership of the NFT. On the other hand, users who do not own an NFT can still benefit from its utilities and earn passive income.

How does NFT renting work?

On platforms that use rental protocols, users can lend and borrow NFTs for a predetermined period of time. The rental terms, such as the number of days the NFT can be rented for, are set by the lender when an NFT is listed on the market. At the end of the rental period, the borrower returns the NFT to the original owner and pays the rent and any additional fees.

Borrowers are required to deposit the necessary collateral in order to rent the NFT under some protocols’ collateralized renting requirements. However, because it lowers the barrier to accessing NFTs and is therefore more appealing to borrowers, non-collateralized renting is now becoming the norm.

A wrapped NFT, which represents the NFT that the lender provided in the first place, is issued to renters after they have paid the necessary fees. Using a smart contract, one token is exchanged for another in an equal amount to create a wrapped NFT (wNFT). The wNFT can be used on multiple blockchains and can contain fungible or nonfungible collateral. It is destroyed at the conclusion of the rental period, and the original NFT is returned to its owner.

Rental protocols are used in many places in the Web3 ecosystem. Let’s look at a few examples.

  • In-game assets and metaverse land rentals by the NFT

When it comes to renting NFT, GameFi assets make a lot of sense. Play-to-earn gamers typically only require certain assets until they reach a certain level of the game. They can rent the necessary game assets during this time and return them to the owners when they are finished using them.

Additionally, Metaverse NFTs are excellent rentals. Landowners can lend their land here to generate a steady income. On the metaverse properties, NFT renters can simultaneously create experiences and host virtual events at their convenience.

Double is a decentralized, open-source NFT rental protocol that focuses on GameFi and metaverse utility NFTs. The most widely used NFT standard, ERC-721, and ERC-1155 are currently supported by the protocol. Collaterals are not required under this protocol. In addition, when the renters return the NFTs, they are not required to pay network gas; Instead, at the end of the rental period, the protocol uses automatic expiration.

You can borrow NFTs from several projects through Double’s own native NFT rental marketplace. It is compatible with more than 90 NFT projects, such as the game ecosystem’s FitEvo and Xandar projects and the metaverses Decentraland, Ariva Wonderland, and MCH Verse.

  • Gaming guilds benefit from rental protocols by enhancing their management procedures

In the GameFi ecosystem, guilds are crucial players. Scholarship providers rent out their NFTs to gamers who play to make money. Operations can sometimes become complicated due to the involvement of multiple parties.

This is where UnitBox’s rental protocol comes into its own. It uses a rent-to-earn model with revenue sharing, pays players and scholarship providers quickly, and provides real-time metrics to monitor players’ performance.

  • Create your own customized NFT renting marketplace

New NFT marketplaces with renting features can be built on top of protocols, which provide the underlying framework. Decentralized apps, for instance, can create white-label solutions that preserve the project’s front-end interface by integrating with the NFT rental protocol, reNFT. Additionally, it is possible to create bespoke NFT renting platforms.

  • New revenue sources for DeFi

The protocol composability that makes it easier to work with other protocols to unlock additional utilities is one of reNFT’s strengths.

They can, for instance, lend their NFTs while also fractionalizing them, take advantage of “buy now, pay later” options to pay off debts, and take collateralized loans against their NFTs.

Another protocol that aims to expand the range of DeFi options available in the context of NFT rentals is the IQ Protocol. As a result, it will be possible to rent NFTs while also gaining access to other services like concert tickets and gated content.

Web3 participants can profit from numerous additional DeFi opportunities based on NFTs they already hold in their portfolios thanks to features like protocol composability and extending NFT utilities during the renting period.