Non-fungible tokens (NFTs) are unique digital assets that exist as a permanent record on the blockchain. There is a genre of NFTs called living NFTs also referred to as dynamic NFTs(dNFT) that is rarely discussed. These are non-fungible tokens that can shift and mutate over time in accordance with the programmable features encoded by developers.

A living NFT is all about dynamism as opposed to a normal profile picture (PFP) project such as CryptoPunks, which remains static. Living NFTs offer exciting ways for holders to link their behavior and actions on the chain with the NFTs they collect.

Here is how a dynamic NFT differs from a regular NFT. Simply put, a dynamic NFT’s metadata may alter depending on a variety of factors. Time, interactions with other NFTs, or more frequently external data, such as data gathered from sources that track real-world data, like weathervanes or live sports scores, can all be considered examples of this.

All of this is made possible by dynamic NFTs by employing smart contracts to integrate these elements within an NFT’s metadata.

Using an oracle, a dNFT that interacts with web APIs, IoT data, or any other verifiable data provider can be created. For example, Chainlink’s Verifiable Randomness Function (VRF) can provide verifiable randomness, interface with existing systems or trigger cyber-physical systems.

All of this is made possible by dynamic NFTs by employing smart contracts to integrate these elements within an NFT’s metadata. For example, a PFP’s hat might change depending on the weather in France or a sports star might show a different emotion depending on the outcome of their most recent game.

How can dNFTs be used?

Dynamic NFTs are useful whenever metadata has to be continually updated. Here is how they can be used:

Gaming: When an in-game character is deployed for the first time, its traits are stored in the dNFT’s metadata. As the character levels up and evolves, the metadata can easily change to reflect its growth.

Another possibility is transferring dNFTs automatically among players based on game performance. For example, if the current owner loses a sword battle, then the dNFT representing the sword is taken away and possibly given to the victor.

Real estate: This is a market where dynamic NFTs are quickly growing in importance. For example, consider a family home that’s been put up for sale by tokenizing it as a dNFT, where the holder also has ownership of the underlying title deed. Over time, the property value changes, and maintenance is performed. The dNFT’s metadata will automatically reflect these changes.

Sports collectibles: In 2021, professional basketball player LaMelo Ball launched a collection of dynamic NFTs that leverage Chainlink Sports Data Feeds, a service that provides secure sports results. Each of the eight dNFTs released so far tracks a different set of the rising star’s player statistics for example “Red Mars” reflects his total points scored.

Holders can receive special access to raffles and other perks based on LaMelo’s ongoing performance. The “Gold Evolve” NFT was launched with the promise that if Ball won the 2021 Rookie of the Year award, which he did, its avatar image would change.

While NFTs have put a face to the blockchain world, dynamic NFTs bring it to life. Even though they are still a relatively new idea, dNFTs have the potential to alter how owners engage with NFTs and the products they stand for.