Will 2022 be the year of the explosion of dynamic NFTs?
The smart contracts of dynamic NFTs have liquidity, allowing NFTs to evolve over time in response to events in the real world.Author: Helen Petraschuk
Source: “What Is Dynamic NFT and Why Is It a Trend?”
Translator: Diamond, The SeeDAO
This article provides a brief introduction to the concept and basic characteristics of dynamic NFTs, compares them with static NFTs, and introduces some classic use cases of dynamic NFTs. The author believes that 2022 is the year of the dynamic NFT explosion and is confident about its market prospects.
The Rising Trend of Dynamic NFTs
The entire blockchain world is going crazy for NFTs. In just one year, static NFT art has attracted billions of dollars from retail and institutional investors. Moreover, it is expected to continue growing at a rate of over 10% per year until 2030, promising more revenue for artists and collectors.
Despite its charm as an innovative niche market, the NFT space still faces two serious issues. One is the uniqueness of proving NFT ownership (yes, they are very easy to "copy and paste"), and the other is the cross-chain transfer of NFTs.
Both of these issues can be addressed through a disruptive innovation: dynamic NFTs. This article will introduce the concept of dynamic NFTs and explore the prospects they promise for all NFT enthusiasts.
Static NFTs vs. Dynamic NFTs
Static NFTs
- Isolated from off-chain environments
- Static; cannot be transferred across chains
- Cannot respond to real-world events
Dynamic NFTs
- Interact with off-chain environments
- Can be transferred across chains (e.g., via the RareLink bridge between Ethereum and Polkadot)
- Dynamically respond to real-world events
The hundreds of ETH in daily trading volume of static NFTs like BAYC, CryptoPunks, and The Sandbox indicate that users have interest and faith in the future of the NFT market.
But times are changing rapidly, and new products are emerging in the NFT world. The arrival of dynamic NFTs will forever reshape the landscape of the NFT market.
OG: crystals and merge. are dynamic NFTs that have caused a sensation in the crypto market. Many experts believe that dynamic NFTs will become the market focus in 2022. So, it’s time to understand all aspects of dynamic NFT creation and get a glimpse of this rapidly developing market. Let’s quickly look at the differences between the two types of NFTs and clarify what dynamic NFTs are.
Benefits of Static NFTs
The NFT market achieved over $18 billion in total trading volume in 2021, and there are reasons for its robust growth. Static NFTs are a unique form of blockchain assets, characterized by their immutable nature and static on-chain data records. The blockchain has always been praised for its immutability, which allows users to store data that cannot be manipulated, preventing fraud in transactions between users.
Benefits of Dynamic NFTs
The smart contracts of dynamic NFTs have liquidity, allowing NFTs to evolve over time in response to real-world events. This property can be applied in various ways, allowing users to transfer NFTs across different blockchains and even change their perceptions of ownership changes. From tokens for P2E game equipment exchanges to fantasy sports games in real life, dynamic NFTs have multiple use cases. Additionally, dynamic NFTs, like the dynamic Shield NFT on Solsea, are expected to feature verifiable random functions (VRF).
Why Are Dynamic NFTs So Important?
As the NFT space evolves, dynamic NFTs represent the next generation of technological solutions. The VRF feature of dynamic NFTs makes authenticity verification possible and ensures the randomness of in-game item distribution. Therefore, P2E players will enjoy fair and random allocations of rare assets and combat power rankings when participating in battles and events in games.
The main benefit of dynamic NFTs is that they can evolve based on changes in real-world data transmitted to the blockchain via oracles. For example, you might own an NFT card of a baseball player. Once they win a championship, your NFT card will change its code based on the real-world data input, displaying your idol's new title.
Thus, the enhanced authenticity of dynamic NFTs allows them to be applicable in multiple fields. For instance, you could use an NFT instead of a passport, eliminating the need for paperwork and stamps while traveling the world. All changes are reflected in the NFT's code, eliminating opportunities for forgery or fraud. This can also apply to bank accounts, educational certificates, insurance, and any documents that need immediate updates after new data is entered.
Changing the Smart Contracts of NFTs
The core of static and dynamic NFTs lies in their smart contract code, enabled by the specific blockchain you are using. Smart contracts are self-executing automated blockchain components that contain all the conditions for triggering specific behaviors or the basic data about an object. Nowadays, creating dynamic NFTs on Solana or on another chain is not difficult, as most of the work happens in bridges and oracles. Their function is to connect dynamic NFTs with the external environment and track data updates related to NFT code, functionality, or appearance. Therefore, your task is to collaborate with reliable smart contract developers and create error-proof NFTs.
What Are Dynamic NFTs?
In simple terms, the smart contract code of this type of NFT contains features and data that can evolve based on inputs from the external environment. For example, the dynamic Duelers NFT collection on OpenSea. This feature is crucial for transferring NFTs via oracles and cross-chain bridges, as blockchain-based static NFTs cannot be used off-chain. Therefore, the transition from static to dynamic NFTs helps achieve better cross-chain interoperability.
How to Create Dynamic NFTs?
Many forward-thinking NFT fans and artists are concerned about "how to create dynamic NFTs." You can look for online tutorials on dynamic NFT creation or obtain the source code for dynamic NFT smart contracts from blockchain developers for your preferred chain. You can find manuals for Solana dynamic NFTs or Ethereum dynamic NFTs to kickstart your business and launch profitable collections in popular markets.
Are Dynamic NFT Projects Profitable?
As the industry continues to evolve rapidly, the number of enthusiasts for dynamic NFT art is increasing. Imagine: the market size for NFTs was just over $80 million in 2020, while it exceeded $17 billion in 2021. It surged over 21,000% in just one year. Therefore, 2022 will be very promising for dynamic NFTs and their fans. With rising interest in this new trend, if you create a dynamic NFT collection, 2022 will be a year of significant gains.
How to Make a Static NFT Dynamic?
In general, static NFTs that have been created and deployed to the NFT market are not convertible. This means they can never become dynamic NFT artworks. These final works are intended to be collected and exchanged in their current form. You can only deconstruct the entire NFT and then use dynamic smart contract code to reconstruct it, allowing it to change in response to off-chain data updates. Check out dynamic NFT works on OpenSea to see what they look like and follow market trends.
