Exploring the Evolution of Dynamic NFTs

bonuz Newsroom|January 20, 2023·Updated July 28, 2026

Non-fungible tokens (NFTs) are unique, irreplaceable crypto assets on the blockchain. These one-of-a-kind assets are typically created using a guideline, also known as a token standard, that ensures that each NFT has a unique token ID. NFTs are being used for a variety of purposes, such as digital collectibles, art, and even digitizing real-world assets like passports, certificates, and real estate deeds. However, these experimental use cases of NFTs may be unable to fully represent real-world assets that carry non-static information. This is where dynamic NFTs come in.

Dynamic NFTs are a sub-category of NFTs that can change their characteristics when certain conditions are met. These NFTs use the ERC-1155 token standard, which is different from the ERC-721 standard used for static NFTs. According to Ethereum, tokens created with the ERC-1155 standard bear similar features to both fungible ERC-20 tokens and non-fungible ERC-721 tokens. This makes them technically semi-fungible and able to change if necessary.

Every NFT contains information called metadata, which describes its characteristics. Metadata can include names, descriptions, and even specific NFT features. For example, gaming NFT metadata could include the traits of an avatar, like strength or stamina. For NFT art, this could include the artwork's colors or accessories.

Dynamic NFTs are created by smart contracts with a set of metadata. The smart contract obtains data from oracles, which are third-party services that provide external information from data sources, such as Internet of Things (IoT) data and web application programming interfaces (APIs). The NFT is then evaluated by the smart contract using data obtained from oracles to evaluate the NFT and encode changes during the minting process. The characteristics of the dynamic NFT will then be updated when necessary.

One of the first and most popular examples of dynamic NFTs is the Ethereum-based game CryptoKitties. In this game, players can collect, breed, and exchange dynamic NFTs in the form of virtual cats. The game's popularity highlights the potential of dynamic NFTs in the gaming industry. Players can level up their avatars using dynamic NFTs to represent their in-game characters, thereby enhancing the gaming experience. As a player gains more experience, their characters' growth could be reflected in their NFT avatars' changing appearances or stats. The concept of progress in games is essential in game design in order to engage players, and dynamic NFTs make this possible. Dynamic NFTs could also facilitate choose-your-own-ending games and other participatory experiences.

Dynamic NFTs have potential uses beyond the gaming industry. For example, if blockchain-based identity becomes a reality, dynamic NFTs may be used to represent digital identity cards or passports around the world. The flexibility of these NFTs would allow changes to be updated automatically without digital identity documents needing replacement. This can include details like place of residence, marital status, and contact details.

In conclusion, dynamic NFTs offer a new level of flexibility and potential uses compared to traditional static NFTs. By using smart contracts and oracles, dynamic NFTs can change their characteristics based on external conditions, making them suitable for a variety of use cases such as gaming, digital identity and more. As the blockchain and NFTs continue to evolve, it will be interesting to see how dynamic NFTs will shape the future of digital assets.

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