What are dynamic NFTs (dNFTs)? This is a question many investors and creators are asking. First of all, you will need to understand what a Non-Fungible Token (NFT) is, and how an NFT is created. An NFT is created from a smart contract which is basically a piece of code which has a strict set of transaction rules for the NFT. The smart contract lives on something called a blockchain, which is a database storage system that can been accessed via the smart contract. Within a smart contract is a link to a metadata file which contains all the details of the NFT, such as the description, title, traits, creator, and image. Metadata is simply what makes the NFT useable and desirable.
Static NFTs have there metadata frozen by recording and locking it on IPFS, and therefore can never be changed. Static NFTs typically use the ERC-721 NFT standard for the smart contract. The ERC-721 standard was first released in January 2018.
ERC-1155 was released in June 2018. The ERC-1155 standard makes it possible for NFTs to be dynamic. When we say dynamic, we mean the metadata can be altered depending upon external conditions. The changing data to update a dNFT is often provided by a data oracle such as Chain link.
This changing of the meta data is carried out automatically via instructions programmed into a dNFT’s smart contract. It defines when and how the data should change. This can be initiated by off-chain or on-chain events.
Types of Dynamic NFT changes
- Traits for NFT image being upgraded.
- Image changing when traits are changed.
- Hidden traits unlocked.
- Description updated.
dNFTs Character Progression Example
Could be used for chracter progression, such as in games. The dNFT may represent a character in a game, which can level-up over time. Each time the character levels up, the metadata changes. The metadata would contain important information about the character which descibes his properties, such as height, age, appearance, etc. As the character changes, so does the data. The buyer would be able to track all the changes made to the NFT, as this can be viewed using a blockchain explorer such as Etherscan.
dNFTs Home Progression Example
Let’s assume we have a property dNFT, maybe in a gaming platform or in real life. The original image displays a simple bungalow that is 1 year old. 5 years later the bungalow is then upgraded into a house. The metadata will then change to reflect those changes. This means the price, image and description will all change. The changes can be viewed by the public, because blockchain technology allows them.