Dynamic NFT vs Static NFT: What are dynamic NFTs (dNFTs)and how do they differ from static NFTs?

Non-Fungible Tokens (NFTs) have become one of the most widely used applications of blockchain technology. They are rapidly making their way into the mainstream with businesses as well as celebrities launching their own NFT collections. Moreover, in just one year, institutional and retail investors have invested billions of dollars in static NFT art.

With Dynamic NFTs (dNFTs), the next step in the evolution of non-fungible tokens has started. Till now most of the NFTs have been static, used mostly as digital collectables and by NFT art projects and play-to-earn game projects.

The static NFTs have fixed metadata after they are minted on a blockchain. This limits their use for purposes such as tokenising real-world assets, building progression-based video games or creating blockchain-based fantasy sports leagues. All of these require the metadata to be updated. This is where dNFTs come into the picture as they can change based on external conditions.

“Dynamic NFTs are the newest generation of technological advancements as the NFT industry develops. The dynamic NFTs are here to permanently alter the NFT market landscape,” says Vijay Pravin Maharajan, Founder and CEO of bitsCrunch.

“The majority of the NFTs you have possibly traded and/or viewed is ‘static’ NFTs. These have IPFS-stored metadata that has been locked (or ‘frozen’) and cannot be altered. The ERC-721 token standard for Ethereum defines static NFTs and mandates the execution of smart contracts. The more recent ERC-1155 standard, in contrast, defines a dynamic NFT (dNFT), which enables metadata to be changed in response to outside factors,” he adds.

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Experts say that a data oracle like Chainlink is frequently used to supply the changing data needed to update a dNFT. Chainlink has been actively promoting dNFT use cases.

Darshan Kothari, Founder and CEO of Vardhaman Infotech says Dynamic NFTs have the advantage of being able to adapt dynamically in response to a real-world event being transmitted to the blockchain.

“Dynamic NFTs have an upgraded increase in their authenticity and can be used in a plethora of ways. dNFTs have quite a flexible smart contract, allowing them to change over time in response to real-world conditions,” says Kothari.

According to the experts, a range of off-chain or on-chain events could cause changes to a DNFT’s metadata, demonstrating the DNFTs’ infinite opportunity to expand the NFT design space, especially for digital collectables and novel game mechanics.

Both off-chain and on-chain data sources can be used as inputs by dynamic NFTs to change the tokens’ metadata. Therefore, the capacity of the token’s metadata to alter is the primary distinction between a static and dynamic NFT.

For example, a football player’s digital trading card can feature performance statistics such as goals scored. When converted to NFT form and then interconnected to the real world via oracle networks, the same trading card may update its statistics in real-time in reaction to the player’s live game performance.

“When a player accomplishes a certain goal, such as completing a certain amount of hat tricks, NFT projects would perhaps automatically mint new NFT cards in real-time. This dynamic behaviour would be a step forward in the development and trading of unique assets,” says Kothari.