Dynamic VS static NFT. Let's talk about the future
At the December 2-3, 2021 "Enter the Metaverse" conference, Stephen Fluin said from the stage that "The next generation of NFTs, will be dynamic". According to the Head of Developer Relations at Chainlink Labs "the future lies with NFTs that are adaptable, flexible, and capable of responding to external cues and data to level up their capabilities". Stephen's words certainly make sense, because as of today few visionary projects are already making strides to make a shift from static to dNFTs.
What is the fundamental difference?
Despite a general decline in market activity (according to some estimates by 92%) for example, in September 2021, 225 thousand NFTs were sold on the peak day. In May 2022, the daily sales volume is only 19 thousand. In addition to the decline in NFT sales, the number of active purses has also declined by 88%. And considering that the majority of these collections are static, it is absolutely clear that the time has come to reform this industry, to update it, to inject new technology and adapt its algorithms to respond to what is happening in the world, which is almost completely realized in NFT, which is why we increasingly hear that the future belongs to them.
So what is the fundamental difference between static NFTs and their more modern dynamic counterparts?
Dynamic NFTs:
- Active interaction with the off-chain environments.
- Dynamically responses to real-world events.
- Moving across chains
Static NFTs:
- Isolation from the off-chain environment.
- No ability to respond to real-world events.
- Can’t be moved across chains.
Limitations related to NFT
Owners of static NFTs face two major limitations:
- So how can one or another collection be considered unique? Rarity is what makes an NFT valuable. But it is much more difficult to guarantee this "rarity" in the fast-growing market of static NFT (hundreds of projects similar to each other appear every day).
- The question of NFT's interaction with the real world. Limitations impose their own imprint on gameplay and incentive mechanisms.
Any restrictions sooner or later provoke progress, and the NFT-world is no exception. Solutions have already been created to abolish or weaken all these constraints, which have been implemented directly in dNFTs. And as a consequence, both the crypto world and the blockchain ecosystem itself have begun to realize even more clearly the true value of this new unique asset class.
The uniqueness dNFTs
The problem of "rarity and uniqueness" is solved in dNFTs by the possibility of modifying a character or its individual characteristics. At the same time, it is often impossible to predict how the hero of the collection will look like or what features he will acquire, which increases the value giving a certain touch of "intrigue". By purchasing static crypto-art, the collector knows in advance what his character will look like in a week or a month - just like on the day of purchase. Let's take the Rubber Duck Bath Party collection dNFTs as an example. The owner of a purchased duck goes to a virtual party at his own risk. He doesn't know if his NFT will get a new eye or crown - and that makes the project more unique than, say, the static Asuna card from "Lives of Asuna". There, buying an NFT with an anime image only gives the collector an anime image that won't change.
Dynamic NFTs and their interaction with the real world
As for the interaction of NFT with the real world, it is worth looking at an example of a real dNFT and understanding its value. For example, a digital basketball player card may contain performance statistics (e.g. points scored per season). If you transfer that card to NFT format and connect it to the real world through oracle networks, it can automatically update its stats based on the player's performance in the real world. Pretty cool, huh? Another example: the new GasMonsters project. If it would have been the usual static NFT collection, we'd see the regular monsters on cards. Nothing unusual - just dragons instead of cats/lemons/monkeys. But in this case, the collector buys a cute little dragon that grows over time (depending on the amount of Gas used in blockchain transactions) and turns into a robotic monster. The more Gas, the cooler the character. Fascinating and intriguing, isn't it?
Outlook
It is absolutely obvious that dNFTs, due to their greater technological sophistication and not being corny on the market, will increase their market share and interest among the NFT community more and more every month. In our opinion, this niche of digital assets is at the very beginning of its development, like Bitcoin in 2014-2015. Overall growth in the price and volume of dNFTs is absolutely inevitable. Just like sudden bursts of interest leading to new peaks, which will constantly update the previous maximum values, are inevitable. To summarize, it is safe to say that by paying attention to dNFT today, you are less likely to experience FOMO in a next few years.
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