Summary
Within the broad class of non-fungible tokens (NFTs), there is a subcategory of tokens called dynamic NFTs. These NFTs are fundamentally different from their static counterparts because they can evolve with smart contracts and conditions encoded by their creators.
Introduction
NFTs are unique, irreplaceable crypto assets on the blockchain. These one-of-a-kind assets are typically created using a set of guidelines known as token standards that ensure that each NFT has a unique token ID.
In addition to crypto collectibles and NFT art, static NFTs can digitize real-world assets, such as passports, certificates, and real estate deeds. However, these experimental uses for NFTs — even if they are realized — may not be able to fully represent real-world assets that contain non-static information.
When a smart contract creates a static NFT, the asset is minted with permanent and immutable token data. In other words, this data cannot be modified. Therefore, regardless of external conditions, static NFTs remain unchanged and become obsolete if there is a change in information.
However, dynamic NFTs can overcome this limitation. While the token ID of the NFT remains the same, dynamic NFTs have the unique ability to change under certain conditions.
What is Dynamic NFT?
Dynamic NFTs are a subcategory of NFTs with characteristics that can change when certain conditions are met. Each NFT contains information called metadata that describes its characteristics.
Metadata can include the name, description, and even features of a particular NFT. For example, a gaming NFT’s metadata might include characteristics of an avatar, such as strength or stamina. An art NFT’s metadata might include the artwork’s colors or accessories.
You may have heard of the Ethereum-based game called CryptoKitties, which was one of the first NFT projects to quickly gain popularity when it debuted in 2017. CryptoKitties is a blockchain game that allows players to collect, breed, and trade dynamic NFTs in the form of virtual cats.
Unlike static NFTs, dynamic NFT metadata can be changed or translated visually. This is because dynamic NFTs are designed using the ERC-1155 token standard, while static NFTs are usually created using the ERC-721 token standard.
According to Ethereum, tokens created with the ERC-1155 standard have similar features to fungible ERC-20 tokens and non-fungible ERC-721 tokens. Therefore, ERC-1155 tokens are technically semi-fungible and can be changed, if necessary.
How to Change Dynamic NFT?
Here's how it works in general:
Dynamic NFTs are minted by smart contracts with a set of metadata.
Smart contracts get data from oracles. Oracles are third-party services that provide external information from data sources such as Internet of Things (IoT) data and web application programming interfaces (APIs).
Then, the NFT is evaluated by a smart contract using the data obtained from the oracle to evaluate the NFT and encode changes during the minting process.
Then, the dynamic NFT characteristics will be updated if necessary.
Dynamic NFT Implementation
Identity
If blockchain-based identity becomes a reality, then dynamic NFTs could actually be used to represent digital identity cards or passports around the world. The flexibility of these NFTs would allow changes to be automatically updated without the need to replace the digital identity document. Examples include details such as residence, marital status, and contact details.
Gaming
The ERC-1155 token standard is primarily used in NFT games. So, it’s no surprise that dynamic NFTs are commonly found in blockchain games. Players can level up their avatars using dynamic NFTs to represent in-game characters, enhancing the gaming experience. As players gain more experience, their character growth can be reflected in the changes in the appearance or status of their NFT avatars.
The concept of progression in games is essential to game design to engage players. Dynamic NFTs make this possible. Dynamic NFTs can also facilitate choose-your-own-ending games and other participatory experiences that require external data to function.
Real virtual state
While real estate tokenization has been around for some time, static NFTs cannot reflect changing factors, such as price, age, and ownership of a property. Dynamic NFTs, on the other hand, can capture smaller real estate details and have the flexibility needed for specific information updates.
Art
As exemplified by the traditional Japanese aesthetic art form wabi-sabi, which focuses on transience rather than eternity, ephemeral and changing art is widely appreciated around the world. With dynamic NFTs, digital artists can use real-time data to encode changes in their artwork to convey this transience, making their artwork more unique. For example, there are dynamic NFT artworks whose appearance changes based on the current weather or season.
NFT art can also be enhanced by mimicking real-world art installations that require audience participation to be appreciated. In this case, dynamic NFTs can change depending on the token owner’s interaction with the asset, thereby encouraging engagement in the digital art exhibition.
Cover
Digital NFTs are a class of NFTs that are “smarter” than their static counterparts, as they can adapt and reflect real-world information in real-time. In addition to the applications mentioned in this article, there are a plethora of uses for dynamic NFTs that can easily meet the needs of NFT modification.
Further Reading
What is NFT?
7 Things to Know About NFTs | Binance Academy
How to Create Your Own NFT - Binance Academy
How to Become an NFT Artist: Getting Started on Binance NFT Marketplace
What is a Token Standard?