NFTs are taking the digital world by storm, revolutionizing the way we perceive ownership and uniqueness in the digital realm. NFTs started to shake off the stigma of simply being tokenized artwork that exists on the blockchain.
However, while static NFTs have gained significant popularity, a new class of NFTs called dynamic NFTs is emerging. These innovative assets have the potential to reshape various industries, thanks to their ability to evolve based on specific conditions encoded by their creators. In this piece, we’ll explore what dynamic NFTs are, why they’re important, and the numerous applications they offer.
What Are Dynamic NFTs?
Dynamic NFTs are a sub-category of non-fungible tokens that can change their metadata under certain conditions. Unlike static NFTs, which have fixed, immutable data, dynamic NFTs are designed using the ERC-1155 token standard, making them semi-fungible and able to be altered if necessary. This unique feature allows dynamic NFTs to adapt and reflect real-time information or changes, making them more versatile and interactive.
The Importance of Dynamic NFTs
The ability of dynamic NFTs to evolve and change based on encoded conditions opens up a myriad of possibilities across different sectors. This adaptability sets them apart from static NFTs, which may become outdated as information changes. Dynamic NFTs can better represent assets or digital items that carry non-static information, making them a valuable asset in the ever-evolving digital landscape.
How Can Dynamic NFTs Be Changed?
Here’s how it typically works:
- A dynamic NFT is minted by a smart contract with a set of metadata.
- The smart contract obtains data from oracles. These are third-party services that provide external information from data sources, such as Internet of Things (IoT) data and web application programming interfaces (APIs).
- The NFT is then evaluated by the smart contract using data obtained from oracles to evaluate the NFT and encode changes during the minting process.
- The characteristics of the dynamic NFT will then be updated when necessary.
Static vs Dynamic NFTs
Applications of Dynamic NFTs
1- Gaming:
Dynamic NFTs are widely used in blockchain gaming, where players can level up their avatars and see their characters’ growth reflected in the changing appearances or stats of their NFT avatars. This enhances the gaming experience and provides a more engaging and immersive environment.
2- Identity:
Blockchain-based identity systems could leverage dynamic NFTs to represent digital identity cards or passports. This would allow for automatic updates to personal details, such as place of residence, marital status, or contact information, without the need for physical replacements.
3- Real Estate:
Tokenization of real estate has been gaining traction, but static NFTs are unable to reflect changing factors, such as property prices, age, or ownership. Dynamic NFTs offer the flexibility needed for specific information updates, making them a valuable tool in the virtual real estate market.
4- Art:
Dynamic NFTs can revolutionize the digital art world by enabling artists to create artworks that change based on real-time data or audience interaction. This allows for the creation of unique, engaging art pieces that can capture the essence of impermanence, a concept valued in many traditional art forms.
5- Fantasy Sport:
Dynamic NFTs can revolutionize fantasy sports by auto-updating player stats in real-time, enhancing immersion & reducing fees, enabling a deeper connection between fans, teams & athletes via tokenized collectibles.
Closing Thoughts
NFTs became popular in 2021. From their beginnings in the digital art world, these non-fungible tokens have been adopted across several industries, from gaming to ticketing, music, to luxury goods and beyond. However, one of the aspects that makes them what they have has also been identified as one of their biggest shortcomings — their permanence and their inability to be changed once they’re minted.
Dynamic NFTs are a testament to the ever-evolving nature of the digital world. In addition to the applications mentioned in this article, their ability to adapt and reflect real-time information opens up countless use cases and opportunities for innovation. And as the world becomes more digitized and interconnected, dynamic NFTs are poised to play a significant role in shaping the future of different industries.
Will the adoption of this new, adaptable token class be widespread? Only time will tell.