Dynamic NFTs: the next level

Non-fungible tokens, or NFTs, have become a prominent feature in the Web3 community. These tokens can be used in a variety of ways and are constantly improving, making them very attractive. The next step in the evolution of NFTs is dynamic NFTs. Dynamic NFTs are NFTs that can change over time. They are useful because they can be used to represent real-world assets that change over time, like a piece of art that gains value over time.

If you are interested in learning more about dynamic NFTs, read on for a detailed exploration of these tokens. This article will start by examining what a dynamic NFT is. Next, we will take a closer look at how dynamic NFTs work. Then, we will compare dynamic NFTs to the more familiar static NFTs. In addition, we will explore some potential uses for dynamic NFTs to illustrate why they can be useful. Finally, we will show you how to create your own NFT using Moralis – the ultimate Web3 backend platform.

The operating system provides some of the best Web3 development tools, which include Moralis Speedy Nodes, Moralis’ Metaverse SDK, Price API, and much more. Combined with the system’s underlying backend infrastructure, these tools ensure that users receive the best developer experience on the market! So, if you haven’t already, sign up with Moralis to create your account for free and become a blockchain developer in record time! Now let’s begin our journey by answering the question, “what are dynamic NFTs?”.

What are Dynamic NFTs?

NFTs are non-fungible tokens that exist on a blockchain. Their defining characteristic is that each NFT is unique and therefore cannot be replaced by another token. To answer the question, “What are dynamic NFTs?” it is helpful to analyze the terminology and clearly define the individual parts of the phrase. Thus, let’s break down the concept and start with a brief explanation of NFTs. NFTs are non-fungible tokens that exist on a blockchain. Their defining characteristic is that each NFT is unique and cannot be replaced by another token.

NFTs or non-fungible tokens are digital assets that exist on a blockchain and each token is unique. NFTs have a unique contract address and token ID. Images, files, data, links, etc. can be attached to the token’s metadata. NFTs can represent unique objects, digital or physical. Once an NFT is minted, the token ID and metadata are permanent.

Consequently, by default, this also means that the ownership of a dynamic NFT can change over time. By understanding traditional NFTs better, we can take a closer look at what “dynamic” means in this context. In many cases, it is beneficial to provide NFTs with the ability to react and respond to external conditions. This is because it can trigger changes to the token’s metadata, which is what “dynamic” refers to in this case. As a result, the ownership of a dynamic NFT can change over time.

An example of a progression-based game where NFTs represent in-game avatars is one where different skills are specified in the token’s metadata. Players might have different strengths, speed, agility, etc. that are reflected in the token. As players progress in the game, the game updates elements so that the tokens more accurately reflect the players’ efforts. Essentially, this means that dynamic NFTs retain a unique identifier but can have aspects of their metadata updated based on external conditions. Now that we know what dynamic NFTs are, let’s explore how they work.

How Does a Dynamic NFT Work?

NFTs can evolve over time through both off-chain and on-chain computations, with smart contracts enabling this functionality. To make this more understandable, here is an illustration of what the process might look like:

1. A request is first initiated to a smart contract for an NFT.
2. The request is received by the smart contract for processing.
3. The smart contract makes a call for on-chain data and processes the results.
4. The contract uses an oracle to make a call for off-chain data and processes the results.
5. Both the off-chain and on-chain data are evaluated. Then, the smart contract returns media one or two to the requestor.

In other words, NFTs can change and update over time thanks to smart contracts. These contracts check to see if an NFT should be changed based on information both on and off the blockchain, and if so, they alter the NFT’s metadata accordingly.

Once you have a strong understanding of the concepts discussed above, you may want to start creating dynamic NFTs. If so, we suggest reading our article on Web3 contracts. This article goes over the basics of smart contracts and provides a comprehensive overview of what these Web3 contracts entail.

The Moralis website offers tutorials on how to develop smart contracts, as well as the necessary skills required. For example, most smart contracts are written in the Solidity programming language. Therefore, learning Solidity is an essential skill for anyone looking to become a proficient smart contract developer.

What is an Oracle?

An Oracle attempts to add real-time data from off-chain data sources such as web2 websites, sensors, etc. An interesting definition can be found below:

This service provides smart contracts with verified and up-to-date data, which triggers a change in state for the smart contract.

Oracles are important for using dynamic NFTs, because they hold the key to expanding dNFTs to different uses.

Oracles are very important for Dynamic NFTs to become ubiquitous.

Now that we’ve explored what an Oracle is,we can dive back to our definition of Dynamic NFTs:

                     Dynamic NFTs = NFTs + Oracles

. NFTs that have dynamic data inputs that are constantly updated are called dynamic NFTs. These NFTs often have static properties in addition to the dynamic data inputs. The following is the flow for a common dynamic NFT contract.

1. Person/process makes a request for Smart Contract for NFT token URI
2. Smart Contract receives request for processing
3. Smart Contract makes a call for on-chain data and processes the results
4. Smart Contract makes a call for off-chain data from an Oracle, and processes the results
5. Contract logic evaluates what to display

Oracles are programs that approve data from the real world to be used in a blockchain. Dynamic NFTs are NFTs that are combined with real-time data feeds. These data feeds can be on-chain or off-chain. For the case of off-chain data, this data needs to be added to the blockchain for analysis by the smart contract. Oracles play a pivotal role in approving data from the real world to be used in a blockchain.

Trends Causing Disruption

• Number of Sales and Total Sales (USD): Increase in Sales Volume and Total Sales Value. As can be seen on the first graph, NFT sales volume is represented by the red line, and total sales in USD is represented by the white line. There is a massive spike in sales volume starting 2021, where the NFT boom was just beggining. This increase peaks at approximately 1.25M daily sales volume in mid 2021. This increase in sales volume is (obviously) correlated to the increase in total dollar sales, which saw a max daily value of $2B. It is important to note that the current bear market landscape and high ETH gas fees have significantly brought down the total transaction volume to below 250k daily sales.

• Primary Sales USD and Secondary Sales (USD): Secondary sales market dominates primary sales market even in bear-market landscape. Another important graph to look at is the total dollar value of both primary (red) and secondary (white) sales. It is clear that the secondary sales business in the NFT market represents a much larger share of total sales for the duration of the period analyzed (with the exception of that one spike in primary sales near the end of 2021). Again, under the current bear market landscape total primary and secondary sales have significantly dropped to near zero and below $25k

• Digital artists are increasingly moving to D2C models for monetizing their creations, resulting in higher margins and the introduction of programmable, enforceable royalties.
• , collecting user data, and boosting marketing efforts Many large companies are beginning to use NFTs (non-fungible tokens) as a way to fundraise, collect customer data, and improve their marketing strategies. NFTs are digital assets that cannot be replaced by another identical copy, and are often used in cryptocurrency. Some benefits that big brands are finding with NFTs are that they can be stored more easily than physical assets, they’re more difficult to counterfeit, and they can be resold or traded.
  • Pizza Hut’s pixelated pizza
  • Pringles and the can of chips you can’t eat
  • Taco Bell’s delectable collectible
  • Ubisoft and its disappearing Rabbids
  • Charmin’s non-fungible toilet paper
  • Nike raids CryptoKitties to patent CryptoKicks
  • Celebrities like Snoop Dogg and Lindsay Lohan have started to create their own crypto collections 

Dynamic NFT Use Cases

Dynamic NFTs have the potential to be used for in-game avatars, as we mentioned earlier in the article. However, this is just one possibility. We thought it would be helpful to provide two additional examples of how dynamic NFTs could be used. These two use cases are:

1. NFT Sports Cards
2. Real Estate

NFT Sports Cards

The first example is a football player’s sports card represented by a dynamic NFT. The NFT includes information about the player, such as speed, agility, strength, goals scored, and assists, which is stored in the token’s metadata.

dynamic NFTs can fetch data from off-chain sources and update their metadata accordingly, whereas static NFTs cannot.

Real Estate

An example of this would be if the property was purchased with the intent to fix it up and resell it. Once the repairs are completed, the NFT representing the house could be updated to include things like the new appraised value and square footage. The second example is real estate, and in this case we will use a house. Let’s say we have a dynamic NFT representing a house. When tokenizing real-world assets, it is often necessary to be able to change the metrics. For example, if the property was purchased intending to fix it up and resell it, once repairs are completed the NFT representing the house could be updated to include the new appraised value and square footage.

We want the metadata for our non-fungible tokens (NFTs) to show any changes that happen to the property. That way, future buyers can see things like the maintenance history, age, market value, and past sales. So it’s a good idea to have the ability to update the metadata when we’re tokenizing real-world assets like property.

Create Your Own NFT

Now that you know more about dynamic NFTs and how they can be used, you might want to create your own tokens. Moralis is the best platform for creating any type of NFT, and it’s easy to use.

The Moralis platform makes it easy to develop all sorts of NFTs with its versatile backend infrastructure and top-of-the-line development tools. One particularly useful tool for NFT development is the Moralis NFT API. In fact, you can create your own NFT in just five steps with Moralis!

Not only can you create a single NFT with Moralis, but you can also create your own collection of NFTs, similar to that of Bored Ape Yacht Club and CryptoPunks. If you’re interested in learning how to do this, our article on how to mint 10,000 NFTs will show you how to create your own collection of NFTs in just a few minutes.

The Moralis platform makes it easy to develop your own NFT marketplace and build an NFT trading interface. It provides you with all the necessary tools to get started in NFT development!

If you want to learn about other types of tokens, the Moralis blog has information on ERC-20 and ERC-1155 tokens. You can also find a guide on our website about how to create your own ERC-20 token in just ten minutes!

What are Dynamic NFTs – Summary

NFTs have gained a lot of attention in the blockchain industry recently. This is partly because there are so many different ways they can be used. Most people are familiar with static NFTs, but there is a new type called dynamic NFTs. So, what are dynamic NFTs?

In conclusion, dynamic NFTs have some similarities to static NFTs, but the word “dynamic” refers to the fact that the token’s metadata can be updated based on both off-chain and on-chain data. Static NFTs, on the other hand, cannot be changed once they are minted.

The article argues that dynamic NFTs’ ability to update their metadata makes them more attractive in some instances, for example when representing real estate. By being able to update the metadata with things like maintenance history and past sales, dynamic NFTs could provide more information than static NFTs.

However, the potential for dynamic NFTs is not limited to real estate. This suggests that dynamic NFTs have the ability to expand the design space for NFTs and take them to the next level.