NFT Industry moving towards dNFTs, and here is what you need to know!
For the past months, we have seen how the NFT industry has evolved from being a wild-west featured film with new projects emerging daily to a more sophisticated ecosystem where brands and artists position themselves.
And now, we are seeing projects move towards Dynamic NFTs because:
- People have become bored of having most NFTs being the same static image
- Dynamic NFTs have more utilities/use cases
- Dynamic NFTs enable a more sustainable business model for the NFT creator
But first, what is a Dynamic NFT, and how does it change from the previous models?
Classic NFTs are static. This means their metadata does not change = The visual representation of your NFTs and data will stay the same for as long as the blockchain exists.
Dynamic NFTs (dNFTs) are well….dynamic! Meaning their metadata can change, and the visual representation of the NFT can change too. dNFT metadata can also be altered through smart contracts built and programmed to adapt to external data and events.
dNFTs offer a best-of-both-worlds approach, with NFTs retaining their unique identifiers while being able to update aspects of their metadata. Use cases such as tokenizing real-world assets, building progression-based video games, or creating blockchain-based fantasy sports leagues for NFTs often require data to be updated.
Let’s deep dive into some use cases:
#1 Loyalty Programs
Loyalty programs are a great way to use dynamic NFTs because they can be customized to fit the needs of any business.
For example, a user could earn an NFT for every $200 they spend at a certain store. The NFT could be stored on the user’s blockchain wallet and could give the user access to exclusive discounts and rewards.
Which big brand or company do you know would love to implement that? At the same time, they could understand the wishes of their users understanding the kind of assets they hold.
A good example is Starbucks announcing its NFT loyalty program. Users will be able to embark on several “journeys,” including activities such as games and challenges designed to increase their understanding of coffee and Starbucks culture. NFTs will be given to members who complete a certain number of journeys in the form of “journey stamps.” Rewards include anything from a virtual espresso martini-making class to rare merchandise, artist collaborations and trips to Costa Rica Starbucks Hacienda Alsacia coffee estate.
Leveraging Loyalty Programs
The interesting thing about NFT based loyalty programs is that other brands, companies, and people offer additional benefits to its members. This is similar to how certain airlines offer “status matches” with members of other loyalty programs, but with NFTs the process is much simpler to implement, and can include more creative mechanics or challenges.
#2 Game Items
Multiplayer online games often involve unique in-game items that give players special advantages over opponents. Games can mint rare in-game items as NFTs on the blockchain, wherein ownership of the NFT allows special privileges within the game, then those can be traded on any secondary market for NFTs.
Some game items can include:
- in-game currencies
- power-ups
- in-game virtual goods
Unlike traditional game items, dynamic NFTs could change or evolve over time-based on how they are used in interactions outside of the game. Through the use of add-on traits, a dynamic NFT weapon or armor could be upgraded or trigger a special mechanic if certain conditions are achieved in another game or the real-world.
#3 Customizable Avatar NFTs
Unlike today’s static PFP NFTs, customizable avatar NFTs are composed of 2 layers: (i) the avatar and (ii) its wearables. You can dress your avatar NFT (base layer) with wearable NFTs (customizable layer). As more metaverses are being built and more users join, having a consistent avatar may be key to networking in these worlds, their services, and creating social structures.
#4 Real-World Items
The value of assets is not static and therefore requires consistent updates when traded or used as collateral for loans and accreditation processes. Connecting with external data sources can bring reliable valuations to these on-chain assets, whether through a trusted API, an aggregation of multiple sources, or crowdsourced.
It could be used for Real Estate, cars, lands, commodities, etc.
Let’s take one example, that of property.
Several projects are working to showcase property-based assets on the blockchain, but how do we make these assets trustworthy in their price? And how could we have up-to-date metadata related to all property info regarding mortgage, rental income, titles, and valuations? This becomes a perfect use case for API integration with external data that could support all these reports.
#5 Collectibles
Collectible NFTs can represent a wide variety of things, like sports collectibles. One good example is the LaMelo Ball NFTs, with each NFT recording a different set of LaMelo’s player statistics, from rebounds and assists to points scored. NFT holders can receive special access to raffles and other NFT-specific perks based on LaMelo’s ongoing performance.
One of these eight NFTs, the Gold Evolve NFT, came with a unique promise: If LaMelo Ball won Rookie of the Year for the 2021 NBA season, the NFT itself would evolve to reflect a new image. LaMelo won the award, and the NFT evolved.
By combining player statistics and off-chain rewards in dynamically changing NFTs, LaMelo Ball fans don’t just own a static digital object; they own an evolving token that grants access to a whole ecosystem of games, experiences, rewards, and more.
Final thoughts
Above are just a few examples of use cases regarding dNFTs; there are limitless different strategies for building incentive structures and rewards available across creator verticals. As dNFTs grow in popularity and the underlying infrastructure advances, at OWL Protocol, we are lowering the technical barriers to new projects be able to build within this technology and, with this, be able to offer unique, ownable digital objects that change, transform and evolve based on events or recipes.
Enter our community on Discord to chat with us to understand more use cases or see how we can collaborate together!
Discord: https://discord.gg/DGWKQNd3
