Unique and nontransferable crypto assets known as Non-fungible tokens (NFT) took the crypto world by storm in 2021, with the most expensive NFT retailing for over $60 million. For the most part, the biggest use case for NFT now is digital art, but in the web3 age, use cases are expanding to include real-world assets and in-game collectibles.

Just as NFT use cases are expanding, the technology behind Non-fungible tokens is evolving. A new development is the emergence of NFTs that can change their properties in response to external data. This article covers this new technology known as Dynamic NFTs (dNFTs). It also explores the technology behind this alternative NFT and its difference from the traditional NFTs, otherwise known as static NFTS.

What is a Dynamic NFT?

When minting a Static NFT (the original NFT), the token ID and metadata are registered as permanent, and the asset is linked to a distinct contract address representing ownership. What this translates to is an NFT with permanent or static properties. In cases where the NFT has been used to represent a real-world asset, the owner cannot make changes to the metadata of that NFT to reflect changes such as price increases or developments.

Dynamic NFTs, however, are also non-fungible tokens but with the added advantage of adaptability. This means that dNFTs can change over time in response to required external data.

The most common use case for NFTs is digital art, such that artists mint virtual representations of their work and tokenize it on the blockchain. Such NFTs are known as 1 of 1, meaning they cannot be replicated or transferred.

Dynamic NFTs are changing the way we view NFT use cases. For example, when an NFT can change its properties in response to external events, it becomes more practical for use cases such as real estate, patents and to show in-game character progression.

History of Dynamic NFTs

For the longest time, NFTs remained static, unable to change their metadata or update their traits. However, in 2020, ahead of the United States presidential elections, Mike Winkelmann, or Beeple as he is popularly known, created the first NFT with an added feature that made it able to change its state.

The NFT artwork, Crossroads, was designed to change its appearance in response to the outcome of the election. If Joe Bidden, the top contender, won, the NFT would display an animation of a bloated Trump corpse rotting in the middle of a park. Conversely, if Trump won a second term, the NFT would appear as a clip of Donald Trump running through hellscape as a Godzilla animation.

Beeple’s unique perspective in creating the first dNFT merely made the industry curious about NFTs that could update or change their traits. By October of the following year, Danil Krivoruchko, Michael Joo, and Snark.art came up with a generative art project, Organic Growth: Crystal Reef, with over 10,000 3D crystals that form a collective artwork.

By 2022, dynamic NFTs had so much evolved to include collections from national associations such as the NBA, popular athletes, and even NFTs on Solana that reacted to web2 metadata.

How do Dynamic NFTs work?

Dynamic NFTs are unique due to the unique programming of their smart contracts. The smart contracts behind dynamic NTFs are programmed with off-chain and on-chain computations. These smart contracts are built to consider on-chain and off-chain data every time a dynamic NFT is requested and to effect changes to the metadata of the NFT in response. For example, one of the premier Dynamic NFTs created by Mike Winkelmann or Beeple was designed to respond to news on the United States presidential elections.

A very integral part of dynamic NFT technology is the use of oracles. As mentioned earlier, the smart contracts behind dNFTs include on-chain and off-chain computations to receive accurate data. However, because the blockchain is completely locked away from off-chain data, a dNFT requiring off-chain data would need to enlist oracles to gain access to off-chain data to trigger the set dNFT changes.

Use cases for Dynamic NFTs

Traditionally, NFTs have been utilized mostly as digital art, but with the evolution of token technology to include dynamic NFTs, the use cases for NFTs are expanding. Some potential use cases include:

Identity

The idea behind web3 credentials, if it expands to blockchain-based identification, could be supported by dynamic NFTs. Dynamic NFTs, because of their ability to change their metadata to reflect external data, are a perfect fit for representing identity cards and passports on the blockchain. It would also eliminate the need to replace these documents just to make a few changes. A blockchain-based identity NFT could include a person’s details, such as contact, address, and marital status, with the option to update as necessary.

Web3 Gaming

NFTs are already being used as collected within blockchain games in the web3 space. dNFTs are also quickly establishing their place in space. dNFTs in gaming allow players to level up their avatars or represent themselves in their in-game characters. Also, a Dynamic NFT could make progressive changes to represent a player’s experience.

Tokenized Real Estate

Real estate tokenization has existed for some time, although with some limitations owing to the nature of static NFTs. Dynamic NFTs, however, can be updated to reflect the increased valuation of an asset or any structural renovations made to the property.

Art

Transient art, characterized by fleetingness and transition, is appreciated in art discussions worldwide. With dynamic NFTs, digital artists can incorporate off-chain data from the real world to represent themes occurring in the real world. For example, an artist can program their NFT to respond to changes in weather or events.

Famous Dynamic NFTs

Since Beeple sold his Crossroads art project in 2020, the Dynamic NFT space has expanded. More traditional NFT creators are experimenting with the alternative method of creating NFTs, with use cases ranging from digital art to in-game collectibles. Lately, the most popular dNFTs projects include:

LaMelo Ball NFTs

The professional basketball player LaMelo Ball created and launched eight dNFTs that record his game stats. The LaMelo Ball NFT collection has quickly become one of the most popular examples of dynamic NFTs. LaMelo took the innovative technology and quickly adapted it to his unique use case.

Each of the LaMelo Ball NFTs update after each game with data on points the player scored, rebounds, and assists. Besides changes to his records, the background color of the NFTs also changes in response to the player’s performance after each game. Interestingly, an NFT from the collection features a distinctive condition. The NFT was designed to transform into a completely different image upon the event that the player won the Rookie of the Year award for the 2021 NBA season.

Source: Chainlink

Regenerative Resources Short Film NFTs

The NFT project of Regenerative Resources (RRC), an ecosystem services company dedicated to turning damaged land into profitable marine environments, forms another popular example. RRC’s Harpoon comprises an NFT series of art from world builders and concept artists from Avatar, Star Wars, and marvel. The profit from each of the NFTs will be used to plant 100 million mangroves across the company’s existing projects.

The NFTs are designed to consist of a single frame upon the first purchase, but after each resale, the NFT will be updated with more frames until the holder of the NFT can view a whole short film.

RRC Medusa Poster #2
Source: Opensea

Otherdeeds Land NFTs

NFTs have recently been used in blockchain games and virtual Metaverse worlds. From the creators of the Bored Ape Yacht Club NFT Collection comes Otherdeeds, a virtual world with 100,000 land dNFTs, all with the same name.

After purchasing the NFT and playing on it, a player can change the characteristics. And the more developed the in-game land, the more valuable the dNFT becomes.

How to Create a Dynamic NFT

The first step to take before creating a Dynamic NFT is to make decisions on the item, variables, and chain that you would like to use. Once you have a definitive plan, you should make a developer environment.

To create your Dynamic NFT, follow these steps:

1. Create the baseline ERC-721 token
2. Upload the different NFT image links in the IPFS URIs
3. Carry out a compile check
4. Ensure that the smart contract for the NFT is “Keepers Compatible”
5. Link your smart contract with oracle feeds like Chainlink and set the dynamic results that will occur as a result of the variables from the oracle
6. Test your dNFT to see if it updates dynamically
7. Mint and deploy your dNFT

Conclusion

In conclusion, a dynamic NFT is a type of non-fungible token that can change or evolve over time based on certain conditions or inputs. This innovative technology has opened up new possibilities for digital art, gaming, and collectibles, allowing creators to build more engaging and interactive experiences for their audiences. While the concept of dynamic NFTs is still relatively new, it has already sparked considerable interest and investment in the blockchain industry. As this technology continues to develop and mature, we can expect to see even more exciting and creative use cases emerge in the years to come.