Dynamic NFTs in Blockchain Games
A dynamic NFT is an NFT that can change or evolve based on external data sources.
NFTs are evolving. No longer a boring and unchanging asset, sitting solemnly on the blockchain like a grumpy cat, Dynamic NFTs are bright and full of sparkling personality, evolving and fresh. Some say these are the future of NFTs and we tend to agree. Let’s look at why.
Putting aside the hard sell, dynamic NFTs are more than just an extra blade on your razer or a new flavour of ice cream, they have real utility and value.
Let’s go quickly through the basics of NFTs then look at what makes dynamic NFTs unique. “NFT” means “non-fungible token”, they are entirely unique assets that exist on a blockchain. They have their own unique contract address and token ID. “Fungible” just means the item is interchangeable and could be replaced by another version of itself, like a dollar bill. Therefore “Non-fungible” refers to its uniqueness, like a special snowflake.
NFTs can represent unique physical or digital objects. Once the NFT has been created, or “minted” the ID and metadata are locked in and permanent, making NFTs a static store of truth.
With dynamic NFTs, instructions on how the metadata should be changed is provided by smart contracts. Each smart contract associated with the dNFT can be triggered by on-chain or off-chain events.
This means the visual appearance and data that makes up the NFT can change over time. This opens up a ton of very exciting use cases, particularly in blockchain gaming.
Blockchain Gaming Use Case
Imagine for a moment your formidable female Dark Elf Rogue, called PwnzNoobz4Eva, in your favourite blockchain MMO. As she progresses through the game, gaining levels, skills, items and abilities, this can be reflected in the NFT that represents your character. All of these changes can be stored in the NFT metadata. The result is that the lvl 1 NFT you initially purchased can evolve into a highly powerful and customised character.
Level 1 rogue becomes..... angry level 60 rogue with violent tendencies
This character progression and levelling is a core tenet in numerous games, particularly blockchain games. Whether characters, space ships, weapons or cards, the opportunities for customisation are vast.
This also then brings in the opportunities for players to trade, lend and borrow dynamic NFTs based on their evolved attributes. More investment in time equals more value.
In addition, games, communities and DAOs can gate or restrict content based on the dynamic NFT having evolved to attain certain characteristics or attributes. For example, imagine DAO community using Discord, that can gate access to member areas based on the metadata of their NFT.
We might take this a step further and imagine The Forest of Mistybottom, a game zone that can only be accessed by players who have 120 strength **and have achieved game level 40. Character level and strength are attributes than can be stored in the dynamic NFT.
Items, for example a sports car in a racing game, can be updated to reflect servicing, when tyre grip, top speed and fuel efficiency might increase after servicing, which is stored in the NFT metadata.
It might also be possible to add visual effects, rare skins, dances and emotes and many other customisations to an NFT over time. All of these hold unique value and status.
Additional Value of dNFTs
From a trading perspective, dynamic NFTs add a lot of potential value both to the owner, future owner or borrower.
The owner might think about levelling up the dNFT for their own use in the game and general game advancement. They might also consider levelling up the dNFT to add value and then sell it on a marketplace.
It might be that the owner wants to lend the dNFT in order to return value and also to continue levelling up the asset. This can be useful if the owner has multiple dNFTs and does not have the resources to level them up alone.
The value of the dNFTs are not only monetary. They connect the player to the game and encourage loyalty. Players are more likely to invest their time into the game when they have ownership over the assets they use, particularly when they can be evolved and made more valuable over time(1). When player loyalty is more valuable than player acquisition, this can be a formidable tool in the game developers belt.
Numerous use cases exist for Dynamic NFTs inside and outside of blockchain gaming. Within blockchain gaming, the case is strong and dNFTs look to be a valuable asset within game economies both as a permanent record of advancement and a store of value in the form of time and money that a player has invested.
dNFTs will continue to find their place in blockchain games and be a valuable tool for game devs and potentially valuable assets to players.