Dynamic NFT and its top ten application scenarios

Dynamic NFT and its top ten application scenarios

Dynamic NFTs (dNFTs), which contain smart contracts that update metadata while preserving the unique identity of NFTs, have many exciting use cases that profoundly impact our digital experience.

1. What is dynamic NFT

Before talking about dynamic NFTs, let’s first mention static NFTs. Static NFT is our common form of NFT, that is, non-fungible token, which is an ERC721 token. The key innovation of static NFT is to provide a way to mark the ownership of native digital assets. Art, intellectual property, real estate, etc. can all prove its uniqueness, indivisibility and real timestamp through NFT. The NFT gameplay around digital ownership in the market has also been brought into full play, such as avatars, pictures, art paintings, game props, virtual real estate, music albums, etc.

As we explore different fields of NFT applications, we gradually find that in the real world, many assets need to update data over time, and static NFTs cannot be updated according to real-world data because they run in a certain blockchain environment. Make corresponding changes, and its limitations and shortcomings are also revealed. For example, when you are playing a blockchain game, as you continue to upgrade, you will want the metadata in the NFT to change instantly to reflect the growth. Or NFT representing personal property, the value of the house needs to be constantly updated to reflect its holding time, market value, transaction data, etc. Therefore, dynamic NFT came into being.

Dynamic NFT, dNFT (Dynamic Non-Fungible Token), as the name suggests, is a form of NFT that provides dynamic features. Dynamic NFTs contain smart contracts that can trigger smart contracts based on external conditions, resulting in changes to the NFT metadata.

2. The key to dynamic NFT development: Oracle

In the previous article, we have detailed the importance of oracles for smart contracts. Similarly, the limitations of dynamic NFT (dNFT) interoperability can also be perfectly solved by “oracles”. Oracles can define data feeds from external data sources, allowing dynamic NFTs to adjust and change based on external data and events, which is extremely important for the widespread adoption of dynamic NFTs.

In addition to using conventional oracles to link external data, dynamic NFTs can also use Verifiable Random Functions (VRFs) to achieve greater potential and value. The verifiable random function can be regarded as a random oracle (Random Oracle). Through any input, a random number output is obtained. The verifiable random function has one more non-interactive zero-knowledge proof than the random oracle, which can be used for Verify the correctness of the random number output, indicating that the random number is indeed generated by a certain person or node. VRF is essentially like drawing a lottery ticket, but the difference is that it has a password to prove that the draw is fair.

Dynamic NFT and its top ten application scenarios

3. Application scenarios of dynamic NFT

Here we list the top ten application scenarios of dynamic NFTs, but in fact its uses are much more than that.

1) Games

The randomness and uniqueness of VRFs open a new door for the application of dynamic NFTs in games. For example, the scarcity and quality level of each game item can be determined in a completely random way. Based on the programmable dynamic NFT, each NFT of the player is dynamic and movable. Players can change and grow according to the rules of the game in the digital space on the chain, and obtain a more unique game experience, and developers can also have a higher creative space.

2) Gaming

NFT virtual cards can represent sports matches of corresponding athletes in reality, and users can place bets and compete with each other. The value of the card depends on the actual game performance of the corresponding athlete. The off-chain game data is connected through the oracle machine to determine the value of the card. Finally, the smart contract is used to determine the winner of the sports game and pay the bonus.

3) Dynamic digital collections

NFTs can be used to create digital collections for interested people to collect. For collections linked to real events, we need to create dynamic NFTs. For example, WAX and Topps have discussed issuing limited baseball cards linked to real game data such as player home run records. Dynamic NFTs can upgrade or downgrade an athlete’s attributes based on their actual performance, such as adding trophies or medals won by the athlete in the most recent tournament. Likewise, a Formula 1 driver’s dNFT can be upgraded based on their race performance, a concept that can be applied to any sport or competitive event.

4) Source tracking and verification of authenticity

At present, some luxury goods manufacturers have begun to cooperate with Web3 companies to mint NFTs to prove the authenticity of products. Counterfeit goods from Apple, Sony, Ray-Ban, Nike and other brands emerge in an endless stream, so I believe they also need to further create dynamic NFTs to verify the authenticity of products and realize dynamic tracking of products.

5) Tickets

In November 2021, a dynamic NFT ticket built by blockchain will be issued at the Crypto Experience event in Miami. After scanning the QR code at the door, attendees will have the opportunity to communicate with Web3 studios, keynote speakers, and industry suppliers; Some dynamic NFTs grant their owners access to live AMA events.

Dynamic NFT and its top ten application scenarios

6) Reward mechanism

For the scenario where users complete off-chain tasks and reward them in the game, as an interesting example, if the number of steps recorded by a child’s sports bracelet reaches a certain threshold, or the test score exceeds a certain score, the game can reward them with special NFT tokens, such as special game props, so that children will be motivated to exercise or learn. Bundling exercise or learning with game incentives creates a virtuous cycle. This approach can be applied to the benign incentive model of any product, school, or enterprise.

7) Revenue sharing

Directly benefit the token holder based on the status of the dynamic NFT issuer. For example, a rock band could issue a limited number of dynamic NFTs to their loyal fans to raise money, promising NFT holders a small share of ticket sales for their next concert. The earnings of dynamic NFT holders will be linked to the band, and promoting their favorite bands can be financially rewarded, while previously, the efforts of ardent fans were almost unrewarded. This format can also be closely linked to the distribution of digital content.

8) Voting for elections

NFTs can also be used to conduct voting campaigns. With the voting mechanism, the issuance of NFT assets can be decided in a democratic way, which also forms a DAO. It can be as small as what kind of digital card to create or as big as how a decentralized hedge fund distributes equity to new investors. Among them, we will use the oracle machine to count the voting results without bias, and transmit the voting results to the smart contract to make the final decision.

9) Valuation update

Asset values ​​such as securities and real estate are not static, so asset valuations need to be constantly updated when trading assets or using them as collateral for loans and certification. Oracles can connect to off-chain data to provide reliable real-time valuations of on-chain assets. It can store all maintenance history of the actual house and amend related records when any new renovations or modifications are made to the actual building.

10) Digital identity authentication

Another great example is digital identity. Imagine your passport becomes a dynamic NFT, your travel history and payment storage will be stored in the NFT passport. It automatically updates every time you travel. In the medical field, individual cases can also be dynamic NFTs, and the modification and update of cases will be completed automatically; in the field of education, dynamic NFTs can be assigned to individual students, record the transcripts on the digital ledger, and unlock the learning list and follow-up through smart contracts. Achievement.

4. Finally: Dynamic NFTs are closely related to the prosperity of Web3

In addition to the top ten application scenarios listed above, dynamic NFTs can also be used for membership discounts, access to someone’s schedule, access to sensitive records such as passports or medical records, corporate fundraising, and any other scenario that requires dynamic correlation.

Dynamic NFTs are undoubtedly the future of NFT technology, and their ability to dynamically update based on real-life events makes them more useful in a wide range of fields. Web3 is developing very fast, and the use cases of dynamic NFTs are also increasing day by day, because of the addition of oracles, dynamic NFTs can utilize off-chain data, greatly expanding their utility, far beyond the previous static form.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/dynamic-nft-and-its-top-ten-application-scenarios/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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