What are Dynamic NFTs, and Why They Are Important?

The NFT sector has made its place in the technological landscape in no time. Dynamic NFTs or living NFTs are assets that change their features based on several external factors. They are totally different from static NFTs.

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Jay Crypto

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Last updated Oct 25, 2022 at 02:09 AM

Posted Oct 21, 2022 at 01:00 PM

Dynamic NFTs

NFTs (non-fungible tokens) have swiftly emerged as one of the most notable aspects of the Web3 ecosystem. Well-known public figures are starting their own NFT initiatives and artifacts as these tokens gain popularity. This makes these tokens extremely appealing, along with the wide range of applications for which they can be used. 

Additionally, these tokens and the associated infrastructure are constantly evolving, ushering in the next phase of NFT development: dynamic NFTs. What exactly are dynamic NFTs, how do they function, and why are they valuable? Let’s look at the answer to these questions in detail. 

Dynamic NFTs: What are They?

"What are dynamic NFTs?" First of all, non-fungible tokens are basically completely original virtual assets that live on a blockchain network. Every NFT is distinct since it has a separate contract location and token ID. Additionally, once an NFT is created, its information and token ID become static and irreplaceable.

"Dynamic" NFTs have the capacity to adapt to and react to environmental factors.  This capacity  is advantageous since it can result in changes to the asset's metadata, which is dynamic.

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Dynamic NFTs

Consider transition games where NFTs serve as the equivalent of in-game characters. Power, velocity, flexibility, and other abilities may be listed in the metadata of an avatar's token. We must update certain components as players advance in the gameplay so that tokens accurately reflect their achievements. 

This simply means that dynamic NFTs can adjust certain features of their metadata dependent on external circumstances while still maintaining a unique identity. Let's examine the operation of these dynamic non-fungible tokens.

Working of Dynamic NFTs

With the help of both off-chain and on-chain computations, dynamic NFTs can emerge. Smart contracts are the technology that enables this. Smart contracts analyze off-chain and on-chain data to establish a solution that is displayed to players whenever an NFT (non-fungible token) is required. Here is an idea of how the procedure might go:

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Step-by-Step Working of Dynamic NFTs

A smart contract is initially contacted with a demand for an NFT. The smart contract receives the request and processes it. The smart contract requests on-chain information and then handles the responses. The contract analyzes the outcomes after making a contact with an oracle for off-chain information. Both on-chain and off-chain data are evaluated. The candidate is then given the choice of the medium by the smart contract.

Essentially, this shows that smart contracts are what allow NFTs to develop, advance, and expand over time. Therefore, smart contracts determine whether an NFT should be modified and, if so, modify the information of a dynamic NFT based on off-chain and on-chain data.

You might wish to develop dynamic NFTs since you have a firm grasp of the aforementioned. You should learn more about the Web3 contracts. The key components of smart contracts are covered in that article, along with a thorough explanation of what these Web3 contracts include.

What’s the Difference Between Static & Dynamic NFTs?

Most people today are probably familiar with static NFTs. A static NFT is a token with unchangeable, everlasting characteristics that have been registered on the blockchain. Static NFT examples include things like pictures, videos, audio, game items, etc. Static NFTs are an excellent choice for many applications, including digital artwork and digital collectibles. In fact, the immutability feature of static NFTs may be what gives them their value.

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Source: Twitter

Dynamic NFTs, the following development of NFTs, can prove to be very beneficial in the development of the blockchain industry. These tokens blend information inputs with the provable, unique characteristics of static NFTs. Additionally, dynamic NFTs can modify the metadata of the tokens using both on-chain and off-chain sources of information. Therefore, the key difference between a static and dynamic NFT is the ability of the asset's metadata to change.

As a result, there are applications for both static and dynamic NFTs, and one will probably not supersede the other. This means that both types of NFTs have a position in the cryptographic world. But the inclusion of dynamic NFTs in the crypto space increases flexibility and expands the range of possible applications for these tokens.

Applications of Dynamic NFTs

As we have discussed previously, dynamic NFTs might be used to create in-game characters. This is simply one illustration, though. Here are two more use cases to highlight the advantages of dynamic NFTs. 

Real Estate

Let's imagine that we have a dynamic NFT that represents a house. It is advantageous to have the option to adjust measurements while tokenizing real-world assets because this is something that is frequently necessary.

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Source: Moralis

In this instance, we would like the NFT's information to represent particular modifications that could take place to the property and be of importance to prospective buyers. As an illustration, the information should show the item's lifespan, market price, previous sales, and maintenance records. Therefore, when tokenizing real-world assets like real estate, it is undeniably useful to have the ability to change and modify the metadata of the tokens.

Gaming Cards

In this instance, we're going to use a football player as one of the initial samples of football cards. Consider a dynamic NFT that represents an actual football player. The metadata of the NFT may contain statistics about a player's power, mobility, flexibility, points scored, assists, etc.

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Source: Ledger Insights

These metrics will alter as the season goes on, of course,  if the player scores another few points. As a result, the dynamic NFT may have the option of acquiring off-chain details regarding the player's advancement and updating the metadata accordingly. This would not be possible with a static NFT because the metadata would remain after the first production of the token.

Identity & Certification

Identities, and certifications can be created using dynamic NFTs. Dynamic NFTs could enable ids that store the most recent edition of a user's trip and history. Dynamic NFTs can be used to own items in augmented reality environments, and consumer activities and place interactions can be used to change their qualities and features.

Conclusion

Dynamic NFTs are live, evolving, and changing tokens. Conventional NFTs are frequently described as "static NFTs" since they stay equivalent; nomenclature in this field is also changing. Dynamic NFTs are a crucial development. They expand the capabilities of the Web3 environment and enable a wide variety of use cases. Dynamic NFTs will be a crucial tool for bridging the gap between the physical and digital worlds.

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