What are Dynamic NFTs?: Use examples and examples

What is a dynamic NFT?

Dynamic NFTs are “living” NFTs designed to be programmable and responsive to external inputs or conditions, opening up new possibilities for personalization, interactivity and value creation in the digital creator economy.

Nonfungible tokens (NFTs) are no longer new to the blockchain community, crypto enthusiasts, and even to non-tech-savvy artists. That said, NFTs are digital objects that can be anything from artwork to music to tweets. Each NFT has a special code that proves its authenticity, and it can be bought, sold, or traded like other things of value.

Over time and with the adoption and development of NFT technology, new use cases and types of NFTs emerge. One of them is the dynamic NFT phenomenon, a significant development in the NFT space that has introduced a new level of interactivity and functionality for digital assets.

Dynamic NFTs, also known as dNFTs, are a new generation of non-functional tokens that include programmable and interactive features, enabling the creation of digital items that can change and evolve over time and, as a result, enabling artists to offer a more engaging experience for buyers and fans.

Unlike traditional NFTs, which represent static digital assets with fixed properties, dynamic NFT architecture is designed to respond to external parameters or conditions, such as user behavior, real-time market prices, time and weather, or other environmental data. For example, Pearpop’s dynamic NFTs allow creators to create NFTs from their social media posts on the Solana blockchain. The dynamic nature of these NFTs means that their ranking increases as the post becomes popular, using metadata such as comments, shares and likes.

How do dynamic NFTs work?

Overall, NFTs are based on progressive blockchain technology, which makes it possible to construct a verifiable and immutable record of ownership and authenticity. Dynamic NFTs are no exception.

When a dynamic NFT is created, the artist defines the rules that govern how the NFT can evolve or change over time. These parameters can be stored in the form of code, such as the Solidity code for the Ethereum network.

The main difference between traditional NFTs and dynamic ones is the token standard. Thus, dynamic NFTs work by storing data in an editable format. While static NFTs are typically created using the ERC-721 token standard, dynamic NFTs use the ERC-1155 standard. This type of token standard is commonly referred to as “semi-fungible” because it can be changed if necessary.

Moreover, dynamism in NFTs is enabled through the use of smart contracts, which are self-executing programs encoded in NFTs. These smart contracts automate certain functions, such as changing the appearance, animations or behavior of the NFT depending on specific circumstances. They also enable various interactions – e.g. allows users to interact with NFT in a virtual environment.

Basically, dynamic NFTs use oracles for modification purposes. Oracles send external data to the smart contract, causing the NFT’s metadata to change. After that, the properties and appearance of this particular NFT are updated, as well as the appearance.

Smart contracts also define how the dynamic NFTs can be bought, sold or traded, and how royalties will be distributed to their creators. To engage with dynamic NFTs, users require a crypto wallet that supports smart contracts. They can then collect, sell or trade NFTs on NFT marketplaces or use them in decentralized applications (DApps) that support and leverage NFTs’ dynamic features.

What are the benefits of dynamic NFTs?

Dynamic NFTs offer several important advantages, such as interactivity, programmability, versatility, and the creation of new revenue streams for artists and collectors.

First, dynamic NFTs offer a high degree of interactivity. Flexibility and ability to change make them more engaging and interesting for collectors and the public while opening up new opportunities for creative expression.

Second, dynamic NFTs are programmable, meaning creators can define rules for how the NFT should behave, providing a high level of automation and control, and enabling new use cases and applications in various industries. For example, a dynamic NFT can represent a character or item in a game that evolves and gains new abilities based on the player’s progress.

Third, dynamic NFTs can be used in a wide range of services beyond digital art, such as in games, social networks, and others. Their versatility opens up new opportunities for developers and creators to innovate and create new immersive experiences for users.

Finally, dynamic NFTs provide new revenue streams for artists. Dynamic NFTs provide an exciting long-term source of income for creators since they can earn royalties from the ongoing use or interaction with their NFTs.

What is the difference between static NFTs and dynamic NFTs?

Static NFTs are fixed and represent a single version of a digital asset, while dynamic NFTs are programmable and can be changed or customized based on certain conditions or inputs. Both types of NFTs have unique properties and can be used in different applications, depending on the specific needs and requirements of the use case.

What are the different use cases of dynamic NFTs?

Dynamic NFTs have a wide range of potential use cases beyond traditional applications of static NFTs such as digital art.

Like traditional NFTs, dynamic ones can be used in art and music to create and represent unique artwork or rare recordings that change over time. For example, an NFT representing a digital painting can automatically change colors or patterns, or an NFT representing a live recording of a concert can update itself to include more songs as they become available.

Furthermore, dynamic non-fungible tokens can be used in games and metaverses to represent in-game items and characters that can evolve or transform according to the player’s actions and interactions. Thus, a digital weapon in a game may gain new abilities or attributes as the player progresses, with these changes reflected in the corresponding NFT.

Another interesting application area is the use of dynamic NFTs for identity management and authenticity verification. Dynamic NFTs can be used to represent a user’s digital identity, with the NFT changing according to the user’s behavior or preferences. Likewise, dynamic non-fungible tokens can be used to represent a user’s social media profile, with the ability to update and evolve based on their actions and interactions on the network.

On top of that, dynamic NFTs can be used to represent assets with constantly changing values ​​that require consistent updates. Using oracles that provide a gateway to access external data sources that provide reliable valuations to on-chain assets, dynamic NFTs can promote the tokenization of real estate, physical goods, etc.

Are there any examples of dynamic NFTs?

There are many dynamic NFT examples in the cryptocurrency space, including game items that evolve as players progress and digital artworks that are transformed by the actions of collectors, time, or even the surrounding environment.

One of the first examples of dynamic NFTs was the unique work titled “Crossroad” by Mike Winkelman, also known as Beeple. The NFT was created before the 2020 US presidential election and was to change its appearance depending on the outcome. After Joe Biden became president, the image changed to show former President Donald Trump lying in a heap.

In 2022, the most expensive experimental NFT art project titled Merge by the pseudonymous digital artist Pak sold nearly $92 million worth of “mass” tokens on the Nifty Gateway market. The tokens are combined to form dynamic NFT collectibles that vary in part based on how many tokens were merged. The artwork is generated on-chain using a custom script, similar to the popular “Art Blocks” NFTs.

Art Blocks is a platform for creating and selling generative artworks that are represented by dynamic non-fungible tokens. The pieces of art are algorithmically generated and can be customized by the owner, creating a unique work of art.

Async Art is another platform for creating and collecting programmable artwork that can change and evolve over time based on various external inputs or conditions. The artworks are represented by dynamic NFTs, making them unique and valuable to collectors.

Permission-free NFT marketplace Rarible also allows the creation and sale of dynamic NFTs. An example of a dynamic NFT on Rarible is the “Crypto Warrior” series, which allows collectors to upgrade their non-fungible tokens with additional features and abilities over time.

“Organic Growth Crystal Reef” are dynamic NFTs that have evolved over time. Over a developer-defined period of three months, the crystals grow in properties and transform their appearance based on transactions and time. Also, these crystals can be used in augmented reality (AR) and will soon have physical replicas displayed in art museums.

A more notable example of dynamic NFTs is LaMelo Ball’s dynamic NFT collectibles that maintain records of the professional basketball player’s game statistics and change according to the updates in his points, rebounds and assists.

These are just a few examples of how dynamic NFTs being created in the cryptocurrency space are being implemented. As the phenomenon continues to evolve, we can expect to see even more innovative and creative uses of them.

What is the future of dynamic NFTs?

The possibilities for dynamic NFT’s future development and adoption seem limitless.

Dynamic NFTs represent a breakthrough innovation in the world of digital assets. With their ability to change and evolve over time, these tokens offer a level of interactivity and engagement that traditional non-fungible tokens simply cannot match. From gaming and entertainment to art and collectibles, dynamic NFTs have already demonstrated a wide range of uses and applications. And this is just the beginning.

As the technology and ecosystem around dynamic NFTs continues to evolve, it is clear that this exciting phenomenon will play an increasingly important role in shaping the future of digital ownership and value exchange. Also, individuals who identify as creators, collectors, or technology enthusiasts may find it valuable to closely monitor the trend of dynamic non-fungible tokens.