A dynamic NFT (dNFT) is a kind of living Non-Fungible Token (NFT) that uses embedded smart contract instructions to change its metadata under certain conditions. This ability to change with game progress pushes use cases beyond art, music, and other "static" media. Alongside semi-fungible tokens, dNFTs have the potential to greatly expand the design space for web3 applications.
Since dynamic NFTs are a variant of classic NFTs, here's a little background information.
Unpacking dynamic NFTs
Non-fungible tokens (NFTs) are provably scarce digital items. Each token has a unique tokenID and a contract address to verify its ownership to a specific user. NFTs are critical to play-to-earn games and have made the largest cultural impact so far as the basis for tradeable digital collectibles.
This new version expands the potential for web3 game design by allowing for greater malleability of tokenized game assets. Unlike standard NFTs, dNFT game assets can transform as the game goes on.
Standard, unchanging non-fungibles typically derive their value from rarity. When applied to gameplay, this quality doesn't always provide the best experience for players. Rare items become prohibitively expensive and possibly unusable, given their real-world dollar value.
While rarity can still affect the value of a dynamic NFT, their ability to change through gameplay gives players more control over their value. Games that provide augmentable items incentivize players to spend time developing their assets into something useful (i.e., playing the game). Game devs receive an increase in player retention, while players receive a more meaningful form of gameplay and value creation.
Dynamic NFTs shift the value center from rarity and speculation to utility. How a player uses a dNFT provides the basis for its value.
How do dynamic NFTs work?
Here's a simple step-by-step of the process.
The player mints a dNFT, either fresh out of the box or after using it for a while.
Upon minting, the oracle collects external data and sends it to the dNFT smart contract.
The smart contract updates the dNFT based on the input from the oracle.
After minting, the smart contract continues to collect data from the oracle.
The dNFT is updated or modified continuously depending on the data received.
Because of their capacity for progression, dynamic NFTs give web3 gaming the type of play experience gamers are accustomed to. Adding even more potential for personalizing in-game items brings an increase in value, immersion, and play-time for the benefit of players.
A dynamic NFT example
Character progression, especially in RPG games, is a great example of what we can do with a dynamic NFT. Players often start RPG games as a generalist, then specialize their skills as they advance through the game.
In this example, the player character itself is built as a dynamic NFT. As the player progresses, they get an opportunity to specialize. By picking one of, let's say, the Warrior, Thief, or Mage vocations, new metadata gets unlocked in their character, upgrading its in-game asset.
Game designers can program the character dNFT to update its artwork, along with its available skills and abilities. As the player makes progress in the game, eventually, they may elevate themselves from a common peasant to a glory-seeking warrior. That's typical, but with a dNFT, they now have a tradable asset whose value reflects their achievements in the game.
The possibilities here aren't limited to the in-game environment, however. Let's say our warrior participates in a tournament event where they square off against other players. If the player wins, their character dNFT could update to include a visual signifier of this achievement, new dialogue options, or benefits with non-player characters - whatever the game designers can dream of.
Dynamic NFT use cases
Game developers are already enhancing the play experience with dynamic NFTs. Here's a look at a few interesting examples.
Crypto Surferz is an online metaverse of quirky arcade games where players compete to earn surf coins and CSF tokens. These tokens can be used to purchase in-game assets with dynamic upgradable stats, increasing the player's chance of winning. This model provides a great use case for the project's token as well as providing outstanding utility for a new style of NFTs.
Kanaria is a good early example of dynamic NFTs in that they allowed users to mint eggs capable of hatching into a functional bird with long-term, evolutionary benefits to its owner. Other players can leave "emotes" on an unhatched egg, the combination of which affects the type of bird that eventually hatches.
In this football (soccer) club manager, players must consistently train their players to increase their abilities on the field. Players are represented by dNFTs that actually regress in ability if managed poorly.
ChainSafe dynamic NFT support
Good news, everyone! Dynamic NFTs are in the works for ChainSafe Gaming's web3.unity library. Our open-source library for web3 game builders will include the ability to add changeable blockchain assets to your games.
We offer a drag-and-drop collection of tools to power your web3 game. You can access these features today with our web3.unity gaming SDK:
Web, mobile, and native desktop support
ChainSafe also offers 1-on-1 consulting services to get your project up and running🏎
Check out the web3.unity github to follow along as we build the tech stack for the next generation of games.
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ChainSafe is a leading blockchain research and development firm specializing in protocol engineering, cross-chain interoperability, and web3-enabled gaming. Alongside its contributions to major ecosystems such as Ethereum, Polkadot, and Filecoin, ChainSafe creates solutions for developers and teams across the web3 space utilizing expertise in gaming, interoperability, and decentralized storage. As part of its mission to build innovative products for users and improved tooling for developers, ChainSafe embodies an open source and community-oriented ethos to advance the future of the internet.