NFTs have reached a stage where it is one of the Web3 community’s most trusted features. These tokens are trying to enter the mainstream with high-profile pictures launching their own NFT projects and collections. This, mingled with these available tokens makes them extensively alluring. Furthermore, these tokens and the technology used for this are continuously improving, inaugurating the next step in the evolution of NFTs. Hence, what are dynamic NFTs, how do they work, and why are they useful?
If you are extremely enthusiastic to know about dynamic NFTs, follow along as we get into details about dynamic NFTs throughout this blog. Apart from that, we will help you to get deep insight into how dynamic NFTs work and a comprehensive comparison with the concept of static NFTs.
What are Dynamic NFTs?
A good starting point to explain what are Dynamic NFTs is to analyze the terminology and elucidate the individual parts of the phrase. Hence, let us begin with a brief explanation of NFTs.
“NFTs” is an abbreviation for “non-fungible tokens”, and they are designed to exist like entirely unique digital assets that are retained on a blockchain. Each NFT is one of a kind and has a unique contract address and token ID. In addition to that, it is possible to link images, files, data, links, etc to a token’s metadata. Thus, NFTs can represent unique objects both digital and physical. Furthermore, once an NFT is minted, the token ID and metadata become permanent, making these tokens static.
Now with the belief that you have got an overview of NFTs let us dive deeper into what the term “dynamic “ means in this scenario. In many situations, it is useful to provide NFTs with the capability to react and respond to external conditions because they can have alterations to the token’s metadata, which is exactly what “dynamic” refers to in this case.
For instance, take a progression-based game, where NFTs stand for in-game avatars. Avatars might possess distinct characteristics such as strength, speed, flexibility, etc as per the token’s metadata. As players proceed in the game, it is required to update elements, therefore tokens reflect the player’s efforts. This precisely means that dynamic NFTs maintain a unique identifier but are allowed the chance to alter and update attributes of their metadata based on external conditions. Now, this is a brief description of dynamic NFTs and it is time to explore how dynamic non-fungible tokens work.
How Does a Dynamic NFT Work?
Dynamic NFTs can expand by employing both off-chain and on-chain computations, and the technology behind making everything practical is smart contracts. Whenever an NFT is requested, smart contracts evaluate both on-chain and off-chain data to determine a response that is presented to the users.
Dynamic NFTs Use Cases
This blog has mentioned that in-game avatars are a potential use case for dynamic NFTs. Apart from this single one, two more additional use cases can illustrate the supremacies of dynamic NFTs. The two use cases are
- NFT Sports Cards
- Real Estate
NFT Sports Cards
The first example is a sports card, and in this scenario, it is better to take an example of a football player. Let us assume that we have a dynamic NFT representing a real-world football player. The NFT for it will be having information, such as speed, agility, strength, goals scored, assists, etc, stored in the token’s metadata.
However, as the season progresses, these statuses will change such as the player might score a few more goals, which indicates that dynamic NFTs have the option to fetch off-chain data regarding the player’s progression and update the metadata accordingly. This would not be possible with a static NFT as the metadata is permanent once someone creates the token in the first place.
The second example is real estate, and in this instance, we are going to take the example of a house. Now, let us say we have a dynamic NFT representing a house. In this case, tokenizing real-world assets, it is better to have the ability to change metrics, something that is frequently required.
In this example, we would like the metadata of the NFT to reflect certain changes that can occur to the property, which is of potential interest to future buyers. Hence, the metadata should present maintenance history, age, market value, past sales, etc. As such, when tokenizing real-world assets such as property, it is beneficial to have the ability to update and change the metadata of the tokens.
Let us assume now you have got a clear picture of what dynamic NFTs are and their use cases. Now, if you like to learn more about dynamic NFTs, feel free to browse the ChainTechSource website, where you can get relevant and the most useful information regarding dynamic NFTs.