What are dynamic NFTs? The “living” symbols that change over time

Non-fungible tokens, or NFTs, are unique digital assets that exist as a permanent record on the blockchain. But if you thought that meant they were static and unchanging, think again. There is actually a whole genre of it liver NFTs. Also referred to as dynamic NFTs, these non-fungible tokens can shift and mutate over time, according to programmable features coded by their developers.

“A living NFT is about dynamics – in contrast to a normal profile picture project (PFP) such as CryptoPunkswhich remains static, says Alexander Guy, head of marketing and growth at Zerion Decrypt. “Living NFTs offer exciting ways for holders to connect their behavior and actions on-chain – and IRL – with the NFTs they collect.”

So how does a dynamic NFT differ from a regular NFT? Simply put, a dynamic NFT’s metadata can change based on varying conditions. It can include the passage of time, interactions with other NFTs, or – more commonly – external data, including information obtained from sources that monitor real-world data, such as weather vanes or real-time sports scores.

Live NFTs achieve all of this by using smart contracts to build these factors into an NFT’s metadata. For example, the hat of a PFP may change depending on the weather in France, or an expression on a sports star’s face may depend on the result of their last match.

Guy’s employer, DeFi portfolio manager Zerion, has launched its own dynamic NFTs using “Zerion DNA”, which change based on data obtained from on-chain actions in Zerion’s online wallet. “Rarity is thus not a function of random attributes, but real actions taken by possessors,” says Guy.

Although each of Zerion’s live NFTs are rare, the company is just one of many that have launched dynamic NFTs.

NFTs that change

One of the first NFTs to change state was created by digital artist Mike Winkelmann, aka Beeple.

In late 2020, ahead of the US presidential election, Beeple created the NFT artwork Crossroad, which changed its appearance based on the outcome of that contest.

If former President Donald Trump beat Joe Biden at the polls, Beeple could flip a switch and have NFT show an animation of a bloated Trump corpse rotting in a park. And if Trump secured a second term, the NFT would permanently show a clip of Trump running through a hellscape, Godzilla-style.

Of course, Biden beat The Donald, which is reflected in the current state of Beeple’s NFT. But Beeple sold his NFT before that happened; his pitch to buyers was that even if they had no idea which NFT they would eventually buy, it would codify a piece of history forever. One buyer was clearly inspired; after Beeple originally sold the Crossroad for $66,000, it was then resold for a record $6.6 million.

While it certainly raised eyebrows at the time, Beeple’s live NFT only hinted at the possibilities of NFTs that can change their state. Using programmable smart contracts, developers can program NFTs to update themselves based on anything they are competent enough to code.

Growth and evolution

Take Organic Growth: Crystal Reef, a generative art project by Danil Krivoruchko, Michael Joo and Snark.art comprising 10,301 3D crystals imprinted in October 2021. Over time, these crystals will become a collective work of art. Finally, the collective crystals will be turned into a physical sculpture, and then transported across the world’s museums and galleries for anyone interested to see it.

The idea is that creatives could purchase an individual “seed crystal”, which several days later turned into a unique OG:Crystal. This crystal would reflect its owner: the smart contract’s algorithms would generate its contours based on each wallet’s history and ID-CryptoPunk holders, for example, would have a chance to add a special shape to their crystal.

For three months after the date of the first sale, an algorithm would add new pieces to the crystal upon reaching the crystal after each subsequent sale. Then the crystal would “lock” the shape so the artists could add it to the sculpture. Did the crystals prove as lucrative as Beeple’s Crossroad? Not really! The floor price of a crystal, as of July 2022, is only 0.06 ETH (about $100). But art isn’t about money, right?

Social data points

Living NFTs don’t have to live in a vacuum, where the passage of time is the main factor affecting their mutation – they can also draw on data from an individual’s real life. In 2021, Playground Studio released a set of collectibles for LaMelo Ball, the 2021 NBA Rookie of the Year.

The NFTs would accumulate points according to data on his performance drawn from Chain link Sports data streams. A holder could choose to reap ‘Silver Moons’ every time the Charlotte Hornets player assisted in netting a ball, or ‘Blue Neptune’ when LaMelo stole the ball from an opponent. If thresholds are met, an NFT avatar can transform.

This kind of approach offers a new way to treat digital collectibles, Guy said. “In the real world, if you collect baseball cards or art, the only way to grow your collection is to buy more. Live NFTs provide the ability to have a collection that evolves over time.”

Where LaMelo led, the NBA has followed; in 2022, the league launched its own collection of dynamic NFTs, The Association. Each NFT represents a player from one of 16 participating teams. During the playoffs, the NFT changes its appearance based on the player’s performance, with dunks, blocks, three-pointers, rebounds or assists causing the player image to change, while the team’s performance affects the NFT’s background and ‘frame’. ‘

Launched in 2022 with the backing of Reddit founder Alexis Ohanian and billionaire Mark Cuban, Pearpop’s live NFTs allowed creators to create NFTs from their social media posts. These NFTs, which live on Solana, are dynamic because they grow in rank if the post goes viral, and take data from web2 metadata, such as comments, shares, and likes. Each level, including silver, gold and platinum, entitles you to different benefits, such as private Discord channels.

In both cases, what’s “live” is not just the NFT itself, but the thing from which it draws data, whether it’s an NBA star living out his hoop dreams or a blogger’s social media posts.

Speaking about the value of live NFTs in relation to communities, Guy said: “Builders and DAOs can leverage this innovation to create gated communities, ultra-exclusive benefits and unique gaming opportunities.”

The future of the living NFT therefore seems inextricably linked to what it draws data from. Of course, it also creates a potential point of failure, if a live NFT’s data point, well… dies.