What are dynamic NFTs: bringing non-fungible tokens to life

Dynamic NFTs (dNFTs) are changing how digital assets work. They add a layer of adaptability and interaction that traditional NFTs don’t have. Instead of remaining static, these NFTs can respond to real-world conditions, opening doors for creative and practical applications in different industries. Although NFTs are nothing new in the crypto space and trading activity has dipped, dNFTs could generate fresh interest in the space. In this article, we'll take a closer look at what dynamic NFTs are, the differences between dynamic and static NFTs, and where such assets might be heading in the future.

TL;DR

• Unlike static NFTs, which remain fixed, dynamic NFTs (dNFTs) can change over time.

• They use smart contracts and oracles to update their state based on real-world data or user interaction.

• dNFTs are popular in gaming, real estate, and entertainment for creating interactive experiences.

• Many expect dNFTs to be used in future applications such as DeFi and virtual reality, and for cross-chain compatibility in Web3.

• AI integration and decentralized ownership could make dNFTs even more versatile and user-driven.

What is a dynamic NFT?

Dynamic NFTs, or dNFTs, add a fresh layer of flexibility and interactivity to the NFT space. They connect the digital and physical worlds in a way that traditional NFTs can’t.

While standard NFTs stay static after minting, representing fixed assets like artwork or collectibles, dynamic NFTs can adapt based on external inputs. A dynamic NFT can change its look, information, or value based on real-time factors like weather, time, or even how you interact with it.

Here’s how the technology works.

• Smart contracts: Dynamic NFTs rely on smart contracts — self-executing code on the blockchain that defines the NFT’s changing rules. These contracts specify how the NFT will respond to certain conditions.

• Oracles: Oracles are essential to dynamic NFTs because they provide the “real-world” data that informs these changes. For example, an oracle connected to a stock exchange could change the NFT based on current market trends. Chainlink, a top oracle provider, is often used in these setups.

• Token standards: Dynamic NFTs usually employ the ERC-1155 standard, which allows for flexible, semi-fungible tokens that can be updated post-minting.

Imagine an NFT tied to a sports player’s performance — each time they score, the NFT could change to reflect their updated stats. This adaptability makes dynamic NFTs valuable in industries where change is constant, such as gaming, where characters can evolve, or trading, where assets can fluctuate.

Dynamic NFTs aren’t just theoretical. The Art Blocks project uses them to create generative art that evolves with interactions. Meanwhile, basketball star LaMelo Ball’s NFT collection updates based on his on-court performance. As the technology improves, many expect dNFTs to find wider use cases in digital and real-world applications, which could lead to a new wave of Web3 engagement.

Static NFT vs dynamic NFT: what's the difference?

Let's now take a closer look at the differences between static NFTs and dynamic NFTs.

Immutability

Static NFTs are immutable, meaning once they’re created, their metadata is fixed. This quality makes them popular for artwork, music, and rare collectibles where permanence is valued. Think of them as digital snapshots that remain unchanged over time, confirming to buyers that what they own will stay the same.

Adaptability

Dynamic NFTs bring a level of flexibility to digital assets. They’re programmed to evolve based on external inputs, which could range from user engagement to real-world events.

Token standards

While static NFTs typically use ERC-721 (which locks the metadata after minting), dynamic NFTs often rely on the ERC-1155 standard. ERC-1155 allows for semi-fungible tokens to be created, which are more adaptable and suited for assets designed to be updated.

Best use cases

Static NFTs excel in areas where a lasting record is essential, such as historical artifacts, traditional art, or collectibles. Dynamic NFTs are better suited for interactive environments, like gaming, where characters and items evolve, or for assets that depend on real-world data.

What are dynamic NFTs used for?

The arrival of dNFTs expanded the possible use cases for non-fungible tokens and presented creators with fresh opportunities to build projects in their vision. What are some of the use cases for dNFTs?

Gaming

One of the most popular uses for dNFTs is in gaming, and specifically for character development. The technology allows developers to create in-game characters or items that grow stronger or change appearance based on player achievements. Here, the dNFT's metadata would be updated as the player progresses, making gaming more personalized and engaging.

Real estate

Dynamic NFTs can represent property deeds or title documents that update over time. If a property undergoes renovations or changes ownership, these updates can be recorded in the NFT’s metadata. This provides a transparent and easily accessible history of the property’s changes. This use case simplifies the transfer of real estate assets and ensures up-to-date information is always available.

Digital identity

Identity verification NFTs are another exciting application of the technology. Dynamic NFTs can serve as digital ID cards that update based on user activity or verified data. For example, a dNFT could represent a professional’s qualifications, and carry new certifications or achievements over time. This could be a new way to check online identities, and give people a safe, reliable, and changing digital identity.

Collectibles and art

Dynamic NFTs also offer artists new ways to engage with collectors. For example, an artist could release an NFT artwork that changes its color or theme over time, or in response to events. This dynamic interaction makes the collecting process more interactive and allows artists to explore creativity with their fans.

Tokenization of assets

Beyond virtual assets, the tokenization of real-world assets like stocks or commodities can also benefit from dynamic NFTs. For example, a stock-backed NFT could automatically update with current stock prices, providing holders with real-time data.

What are examples of dynamic NFT projects?

Now that we know how dNFTs can be used, let's look at some specific dNFT projects you can get involved in today.

Fight Out

This health and fitness-focused metaverse project allows you to create and train NFT fighters that evolve based on real-life fitness activities. Each NFT fighter’s attributes change as you achieve specific health and fitness milestones. The project connects physical health with digital assets, offering you a way to view your fitness progress reflected in your NFT’s development.

Sorare

Sorare is a fantasy soccer game where player cards take the form of dNFTs. These cards represent actual football players, and the dNFTs’ attributes and value fluctuate based on the players’ real-life performance in matches. For example, if a soccer player scores a goal or achieves a milestone, their corresponding dNFT card can gain value, directly linking sports and blockchain technology.

Chainlink dynamic NFTs

Chainlink’s oracle services enable developers to create NFTs that update based on real-world data, including weather, stock prices, or sports scores. For example, an NFT could represent a virtual crop that grows based on local weather conditions, or a financial asset that reflects stock price changes.

Art Blocks

Known for its generative art, Art Blocks also offers dynamic NFTs that evolve with interactions or data inputs. Projects like “Dynamic Slices” by pxlq adapt with each interaction, giving you a unique experience each time you view it.

These dNFT examples show how versatile this technology is. They offer interactive, real-world NFT experiences across fitness, gaming, art, and data-driven assets. It’s important before participating in these project to do your own research and never commit more funds than you can afford to lose.

What's next for dynamic NFTs?

Many believe there's much more to come from dynamic NFTs, including the following.

DeFi dNFTs

One area of expected growth is in DeFi. For example, we could see dynamic NFTs that show trading portfolios or yield-bearing assets. These dNFTs could be programmed to update their content automatically to reflect changing market conditions. Traders would receive real-time insights and see the value of their holdings change without manual tracking. This use case would align closely with DeFi’s goals of transparency and accessibility.

Creative fields

Looking at another example, musicians could release dNFTs that add new songs or artwork with each album launch, giving fans a growing, dynamic collection. Virtual reality and the metaverse also present interesting possibilities for dNFTs. Tokens could be designed to change based on your actions or virtual world conditions, creating immersive experiences that bridge digital and physical environments.

AI

Meanwhile, we may see the integration of dNFTs and AI to create assets that evolve autonomously, using machine learning to adapt based on interactions or personal preferences.

Decentralized ownership

Decentralized ownership is another possibility, giving asset owners more control over how and when their dNFTs evolve. This decentralized ownership could empower owners to personalize their NFTs even more, making digital ownership more interactive and engaging.

Cross-chain compatibility

As demand for NFTs grows across different blockchain platforms, dNFTs that can interact across chains could become more valuable, improving interoperability within Web3.

The final word

Dynamic NFTs bring interactivity to art, virtual gaming, and even real-world assets as an evolution of conventional static NFTs. The technology's adaptability makes dNFTs ideal for industries that embrace change, meaning we could see future innovation as developers find new use cases. As dNFTs continue to grow in adoption among Web3 users, features like cross-chain compatibility and AI-driven evolution could become commonplace, opening doors to new possibilities.