Dynamic NFTs are the key to unlocking the full potential of Web3. Unlike traditional tokens, dynamic NFTs or “dNFTs” change over time based on external conditions. This ability has created many compelling new use cases for digital assets and is changing the way we think about NFT technology.
Dynamic NFTs are “living” tokens. They respond to outside triggers such as price fluctuations, user behavior, time, weather, etc. These moving data points can be used to update the metadata of dNFTs, thereby allowing them to transform over time to evolve along with the world around them.
Imagine, for instance, an NFT that represents a social media account. With dNFTs, this NFT could change color, gain some kind of flair, or take on some other characteristic to show your ranking on the social media app as evidenced by likes, reposts, comments, etc. This “ranking” could then theoretically unlock token-gated dAPPs, websites, or digital experiences reserved for popular influencers.
Alternatively, this ranked-up dNFT could also be sold at a premium price versus an unranked version. Through NFT marketplaces, buyers and sellers would be able to trade these accounts with much greater fluidity than previously possible.
This possibility is just one application, however. In order to fully understand the potential of dNFTs, one must first know how they work. Furthermore, how does Chainlink’s oracle technology help dynamic NFTs function? How do people even make dynamic NFTs? And overall, what are dynamic NFTs and how do dNFTs differ from traditional NFTs?
By reading this guide, you will gain an understanding of how dNFTs are already changing how we view and utilize NFTs. More importantly, we’ll also take a look at how dNFTs will have an even greater impact on our future.
Dynamic NFTs are the missing ingredient to unlocking Web3’s full potential
Image Credit: Analytics Insight
Dynamic NFTs are a subcategory of NFTs encoded with editable smart contract logic. This feature allows them to change their metadata based on outside events. As a result of the metadata changing, the token itself changes too. This utility opens up an entire world of possible use cases that were previously impossible with traditional NFTs.
dNFTs offer an innovative new way for artists to combine programming and artwork
Image Credit: Shaan Ray
Like normal NFTs, dNFTS use blockchain technology to establish verifiable and immutable records of ownership and authenticity. When someone creates a dNFT, they set rules for how the NFT can change and which outside events to track. These rules are stored in the code itself.
Oracles function by taking information from real-world APIs and then sending it to smart contracts. The smart contract then executes its programming and changes the dNFT’s metadata. By changing the token’s metadata, its characteristics and appearance are updated.
In summary, dNFTs use oracles to take in data from outside sources. Then, the oracle interprets the data and dictates changes to the dNFT’s metadata. Finally, the dNFT changes its appearance or behavior to align with the new information.
Dynamic NFTs are the bridge between Web3 and the real world
Image Credit: Chainlink
Traditional NFTs are static and cannot change once minted. Dynamic NFTs, on the other hand, are programmed to transform based on outside inputs.
The differences between traditional NFTs and dynamic NFTs lend themselves to different use cases. Traditional NFTs are better suited for situations in which the user would prefer the asset doesn’t change. This immutability offers increased security and peace of mind– there’s no chance of a traditional NFT changing after purchase.
CryptoPunks are popular because of their historical significance and wouldn’t benefit from dNFT technology
Dynamic NFTs are a much better choice for more interactive projects. Using dNFTs for gaming, for example, would allow players to update characters after completing challenges. Basically, any scenario that would benefit from increased interactivity and flexibility would lend itself well to dNFTs.
Even though Dynamic NFTs are somewhat new, there have already been many projects that utilize the technology.
The Chromie Squiggle uses dNFT technology to move when clicked on
Image Credit: Artblocks
Like Artblocks, Async Art is a platform that helps artists to create and collectors acquire programmable art pieces. These items adjust themselves based on outside conditions through the usage of dynamic NFTs. This ability allows creators to create unique on-chain experiences for collectors.
NBA star LaMelo Ball collaborated with Chainlink to release an innovative NFT collection based on dynamic NFT technology. The collection features eight different NFT types, each version representing a specific statistic (points, rebounds, assists, etc). Holders of the NFTs received access to raffles and other perks depending on Ball’s on-court performance.
One type of LaMelo Ball NFT, The Gold Evolve NFT, promised to evolve into a new image if LaMelo won the Rookie of the Year award. The Charlotte Hornets player did in fact win the award, and as a result, the NFT transformed into a different image. To date, LaMelo Ball’s NFT collections are one of the greatest examples of what’s possible when we start linking dynamic NFT technology to the world of digital collectibles.
As we all know, Trump lost the election. The NFT updated itself automatically to show an image of the former President strewn on the ground with “loser” graffitied on his naked body and a clown emoji floating over his body. The piece was so popular that it sold on Nifty Gateway for $6.6m.
Beeple used dNFT technology in 2020 to put his unique spin on the Presidential election
Image Credit: Duckie Land
Dynamic NFTs can be used for much more than artwork, however. In fact, the vast majority of dNFTs will likely have nothing to do with art.
With Dynamic NFTs, gamers will be able to own NFTs that represent their characters and items. As these assets level up, their corresponding NFTs will also evolve to match in-game performance. These items will be owned in individual owners’ wallets outside the control of game publishers. If a game company goes out of business, for example, the NFT will remain in a player’s wallet as well as any game progress or achievements associated with it.
Real-world assets such as real estate will also be disrupted by dNFTs. Traditional property deeds, for example, may someday be replaced by dNFTs. When a property switches ownership, a dNFT will update itself to account for the change.
Likewise, dNFTs can be used to represent homes themselves. The NFT can be updated when the property owner completes a major repair or upgrade. By doing so, we can create an easy solution to maintain property records that are guaranteed to be accurate, transparent, and accessible.
Dynamic NFTs can help modernize the real estate industry by tokenizing real-world assets
Image Credit: Chainlink
Here are the steps to creating a dynamic NFT:
We are just scratching the surface of what’s possible with dynamic NFTs. The power to connect with the outside world will unlock massive potential and bridge Web3 to everything that came before it. In all likelihood, dynamic NFTs will be so omnipresent in our daily lives that we won’t even think about them as NFTs anymore.
As this trend continues, dynamic NFTs will become fixutres in our daily lives and prove just how important blockchain is to our future.
