Non-fungible tokens (NFTs) have widely been used in Metaverse and gaming. These blockchain-based applications are rapidly making their way to businesses and lots of celebrities and big companies have launched their own NFT collections. However, most of these NFTs are static ones. Static NFTs are minted on the blockchain and their metadata cannot be changed or alerted. This makes static NFTs easily identified, though there are some limitations to generally using them in environments that include additional data, such as progression-based video games or blockchain-based games.
Metaverse, on the other hand, is potentially active and includes a lot of additional data. As NFTs are a basic block for Metaverse, it seems necessary to have NFTs that are more compatible with the latest technology. Dynamic NFTs (dNFTs) seem to be a potential solution to all limitations static NFTs have regarding Web3 and Metaverse.
In the following, we provide a full guide on what dNFTs are and how they work.
What is an NFT?
To learn about dynamic NFTs, let’s start with a brief explanation of NFTs. NFTs or non-fungible tokens are entirely unique digital assets that exist on a blockchain. Each NFT is one-of-a-kind meaning that they have a unique contract address and token ID. Moreover, NFTs can represent unique objects, both digital and physical, like photos, music cards or properties. When an NFT is minted on a blockchain, the token ID and metadata are permanent, making these tokens static. If you would like to get the more detailed information regarding non-fungible tokens, read an in-depth explanation of NFTs here.
What are dynamic NFTs?
Simply put, dynamic NFTs can change their characteristics when certain conditions are met. Each NFT is designed to have certain metadata that describes its characteristics. The metadata of an NFT includes general and specific fields that are various for each NFT collection:
- General fields are fields like names and descriptions.
- Specific fields can be the shape of the mouth, outfit, level of stamina, etc.
The metadata does not change in static NFTs. However, dynamic NFTs allow metadata to change using smart contracts. Dynamic NFTs are allowed to change based on the conditions in their smart contract which are configured at the time of minting. Smart contracts can leverage oracles to access off-chain data sources such as web API and IoT data to make changes to the NFTs. Dynamic NFTs are shown to have more utility since they can respond to user interaction with the tokens, which makes them have potential limitless utilities.
In other words, dynamic NFTs, unlike static ones, are responsive and interactive to the environment. Therefore, as an example, the appearance of the NFT can change if it is sold. Any factors in the online or real world may determine the change to the images, and they can be relatively predictable or completely algorithmically generated, depending on the creator’s intentions.
It can be summarized that typical static NFTs have unchanging metadata, but dynamic NFTs can constantly grow and change. They are the next development in the NFT world.
Follow @nftnewspro Follow @nftnewsproHow does a dynamic NFT work?
Blockchains are closed systems meaning that they execute smart contracts based on data from their native ledgers. Therefore, they can’t receive information or conduct business off-chain without additional assistance. As the result, blockchains require elements called oracles to be intermediaries between off-chain and on-chain data sources.
According to the concept of dynamic NFTs, it is understood that dynamic NFTs can evolve using both off-chain and on-chain computations based on their smart contracts. Whenever an NFT is requested, smart contracts evaluate off-chain and on-chain data to determine the best choice for the users. The following steps show the process:
- A request is first sent to a smart contract for an NFT.
- The smart contract receives the requests and processes them.
- The smart contract makes a call for on-chain data and processes the results.
- The contract uses an oracle to make a call for off-chain data and processes the results.
- Both the off-chain and on-chain data are evaluated. Then, the smart contract offers one or two suggestions to the user.
Therefore, it can be said that it is smart contracts that allow NFTs to change, update, and expand over a period of time. Besides, smart contracts determine if an NFT should change and, if necessary, alters the metadata of a dynamic NFT based on the off-chain and on-chain data.
At this stage, the oracles of a blockchain must have accurate data at all times. Compromised oracles investigate all protocols and smart contracts on blockchains they communicate with in order to facilitate communication necessary to most dynamic NFTs.
Possible implementations of dynamic NFTs
We already noticed that dynamic NFTs can constantly change, stay up to date, and provide a reason for users to keep them for longer terms, collaborate on them, and acquire them. Although there are many areas that dynamic NFTs can be applied, here we mention six common areas to apply dynamic NFTs:
NFT tickets
Dynamic NFTs metadata can change in response to people’s actions and their interaction with the ticketed event; therefore, dynamic NFT tickets unlock limitless possibilities to integrate quests, challenges, and tasks. This causes a more interactive experience, people take a role in the event, and have their achievements reflected in a rare NFT and enjoy the exclusive benefits it offers.
Move-to-earn apps
Dynamic NFTs reward the most engaged users with bonuses and exclusive benefits to create an active and engaged community. Imagine sneakers that can change color and increase in rarity after a person walks for a certain mile. This technology can also be applied in health, lifestyle, and sports brands’ communities.
Wallets
Virtual life of users is presented by their avatars. Their virtual behaviors may change and cause a reason to keep hold of the NFT and engage with the virtual space. Consider Zerion DNA which is a ‘living NFT’ for exploring web3. DNA responds to the user’s balance, the amount spent on gas fees, and the networks used, so they constantly change.
Games
In-game conditions such as avatars, weapons and properties can change based on experience or the rate of ETH in a game. for example, if an NFT is burned the sky could change color. Or a weapon may grow more powerful with winning a reward. These are just some of the many potential uses for gaming. [1]
Art
Dynamic NFTs offer a completely new artistic method; pieces are never the same and may change their colors with the environment. Images and music can be changed with each transaction, based upon the users’ wallet history and other factors. This meant that the owners became co-creators of these artistic pieces.
Documentation
Dynamic NFTs can help demonstrate ownership and proof of change. Consider a dynamic NFT house. With each change to the house, for example, renovations, new rooms, improved heating, etc. would be possible, and the value can constantly update. Nothing can be hidden, and document ownership can be traced on the blockchain.
There are many more potential uses with dynamic NFTs in the web3 world and due to their potential, they will become the norm in the NFT world.
Are dynamic NFTs the future?
Dynamic NFTs are known to have several advantages over static NFTs. This priority will make them become standard, and provide a real future for NFT technology. The advantages include:
- Dynamic NFTs increase users’ engagement. Since they are constantly growing and changing, users will have a real incentive to engage, co-create and own them.
- Dynamic NFTs improve collaborations between communities as they need to determine the necessary variables that should be considered in the smart contracts.
- Dynamic NFTs always keep updated and define the floor prices. People always want to buy something new, therefore there will be real value to the ever-changing dynamic NFTs. But, those who hold them have many reasons to keep them, so they maintain a floor to their value.
A final word
NFTs have quickly become one of the most important features in blockchain industry. There has been an increase in attentiveness towards NFTs due to the vast number of NFT use cases. However, the NFTs that most people are familiar with are static NFTs that are not truly compatible with the modern digital world. Therefore, dynamic NFTs are introduced to satisfy the needs within the Web3 realm.
The word dynamic, in fact, refers to the token’s ability to update its metadata parameters based on both off-chain and on-chain data. This allows the NFTs to be used widely and agree with the requirements or the environment they are applied in. There are more and more cases for using dynamic NFTs in the Web3 and Metaverse and seems that it will be the future of the NFT market.
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