NFT Rental Protocol

These protocols provide the infrastructure for renting NFTs for a limited period of time. They allow the transfer of NFT user rights without the need to transfer complete ownership of the NFT. This means that users who do not own an NFT can rent it and benefit from its features, while the owners of these NFTs can receive passive income.

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How does NFT renting work?

The principle is similar to, for example, renting a car or renting a cottage. Users can rent out their NFTs on platforms that have these protocols in place, and other users can then rent them. The renter sets the terms and conditions in advance, such as the length of the rental and the price. The user interested in the NFT pays the set amount plus any fees and returns the NFT to the original owner at the end of the term.

There are also protocols that require a security deposit to be paid by the borrower, but these protocols are less common and those that do not require such a security deposit are more likely to be used, as this reduces the barrier to accessing the NFT, and makes them more user-friendly.

Shortly after paying the required amount, the rentee receives a wrapped NFT that represents the lender's NFT. The wrapped NFT (wNFT) is created by exchanging one token for another of the same amount, using a smart contract. This wNFT can contain fungible or non-fungible collateral and works across multiple blockchains. At the end of the agreed rental period, this wNFT is destroyed and the original NFT is returned to the owner.

These protocols are used in the Web 3.0 world for many reasons.

Leasing game assets and land in the metaverse

Leasing NFT game assets makes a lot of sense. Those who are playing for money usually only need these NFTs until they reach a certain level. Therefore, it is better and cheaper to simply rent the required NFT for that period of time and return it to the owner when the goal has been reached.

Another candidate for renting are lands in metaverse games. Owners of these plots can rent them out and access long-term passive income. In turn, tenants have the opportunity to use these plots to host various virtual events or build experiences.

Double Protocol is a decentralized, open-source NFT rental protocol for Metaverse and GameFi NFTs. This protocol currently allows ERC-721 NFTs to be rented out, which is the most widely used NFT standard along with ERC-1155. This protocol does not require any collateral. In addition, the tenant does not have to pay gas fees when returning the NFT; instead, this protocol deploys automatic expiry at the end of the lease term.

Double Protocol NFTs from several well-known projects can be rented. This marketplace has integrated more than 90 NFT projects, including the Decentraland metaverse, Ariva Wonderland, MCH Verse and other projects from the gaming ecosystem such as FitEvo and Xandar.

Hiring protocols help guilds improve management processes

Guilds are very important to the GameFi ecosystem. As providers of scholarships, they often rent out their NFTs to Play-To-Earn gamers. However, as several different parties are involved in this rental, complications can sometimes arise.  

To assist with this, a rental protocol called UnitBox can be used. This Rent-To-Earn revenue-sharing model makes payouts to players and scholarship providers very quickly, plus it provides metrics to track player performance in real time.

Creating your own marketplace with your own NFT rental solution

With the logs providing the basic framework, developers can create new NFT marketplaces with rental features. For example, using the reNFT rental protocol, it is possible to create a white label solution that retains the front-end interface of the project. It is also possible to develop customized rental platforms.

New DeFi options

The biggest advantage of the reNFT protocol is its complexity, which makes it easy to work with other protocols and thus allow the use of other tools.

For example, it is possible to lend NFTs while fractionalizing them, use "lease now, pay later" loan repayment features, or draw secured loans against your NFTs.

Another protocol that is attempting to expand the range of DeFi's capabilities in the area of NFT rentals is the IQ protocol. With this protocol, it will be possible to rent out your NFTs while accessing other services, such as concert tickets or closed content.  

With features such as protocol complexity and the extension of NFT tools during the rental period, Web 3.0 users can benefit from many more DeFi opportunities based on the NFTs they already have in their portfolios.

Source: nftnewstoday.com