Wave Four: Combination — Dynamic NFTs
This is the 8th part of an ongoing NFT classification series.
In the eight part of this NFT series, we explore an exciting new breed of NFTs — Dynamic NFTs
Editor’s Note: We’re already on article number 8 of our DeFi Singapore NFT series! We’re fast coming to the series conclusion and would like to thank everyone who has reached out and contributed. There’ll always be the time and space for collaboration and cooperation so don’t hesitate to reach out to us — details are at the end of this article. For now, let’s return to the article!
From digital collectibles with added utilities to the formation of creative self-driven communities — we are witnessing a thing of the future before our very eyes. It is crazy to think that NFTs are still in their nascence and it’ll only continue to evolve.
If you think 2021 was a crazy year, then think again — 2022 is going to bring NFTs to new and exhilarating heights.
In the last article, we dove into the world of Asset-Backed NFTs where we see how blockchain technology has already revolutionised the wine, diamond, and whiskey industries through unique tokenisation, verification of legitimacy and the elimination of counterfeiting.
Today, we’ll be diving into the world of Dynamic NFTs.
What are Dynamic NFTs?
Well, before we talk about Dynamic NFTs we need to talk about blockchain oracles — a technology that is already implemented within the crypto eco-system and will be a major part of the next NFT revolution.
Pythia
Meet Pythia.
Pythia was the name of the high priestess of the Temple of Apollo at Delphi. She served as its oracle and was known as the Oracle of Delphi. Pythia were highly regarded because of their ability to channel prophecies from Apollo himself while in a dreamlike trance.
In short, Pythia was the best oracle in ancient Greece, and everyone paid her to know the future.
The sanctuary at Delphi was constructed in the 8th century BC, but the final prophecy was given around 393 AD after Roman emperor Theodosius ordered the closure of all pagan sanctuaries.
Blockchain Oracles — The Digital Pythias
Today, we see great strides in blockchain technology with the implementation of blockchain oracles.
However, the implementation of blockchain oracles brings with it a huge dilemma — to keep the blockchain safe from extrinsic interference or expose it to external systems that may negatively impact decentralisation?
Before the advent of blockchain oracles, smart contracts didn’t have any access outside of their network. This means that what is on a blockchain cannot be updated unless items or data on the blockchain are burned (usually a smart contract), created anew, and then furnished with updated data.
This was a restriction that severely limited real world use cases for blockchain technology — which makes blockchain oracles an obvious winner in driving mass adoption and utility for the blockchain.
Ok, DeFi Singapore — so what exactly are blockchain oracles? We’re getting there!
A blockchain oracle is a service that provides smart contracts with verified and up-to-date data, triggering changes in the state of a smart contract. This seriously widens the scope of what you can do on a blockchain — especially in the world of Dynamic NFTs.
An NFT is really a smart contract. It is bound by the same limitations that any regular smart contract faces — being isolated from the outside world. However, with blockchain oracles that is no longer an issue.
Dynamic NFTs are non-fungible tokens which are able to trigger a series of actions through the use of an oracle. In essence, they can be triggered by real-world events or interact with smart contracts and other NFTs.
TLDR: This means that Dynamic NFTs can be altered and changed based on new incoming data that is provided to them by oracles.
FYI: CHAINLINK
Chainlink is the prime example of a blockchain oracle network. As a decentralised oracle network that provides real world data to smart contracts on the blockchain, Chainlink is a software known as “blockchain agnostic middleware” — an intermediary that translates data from the real world to smart contracts on the blockchain interchangeably.
However, single centralised oracles might create a glaring problem for decentralised blockchains — a central point of weakness. How do we know if data is accurate if an oracle is faulty? What’s the point of a trustless blockchain smart contract if the data that an oracle feeds it is in question?
(Sidetrack: A Twitter thread on Centralised Oracles vs Decentralised Oracles)
Chainlink is a decentralised network of nodes that bridges off-blockchain sources with on-blockchain smart contracts. How is data verified? To put it very simply, Chainlink oracles utilises three smart contracts which vet an oracle provider’s performance history, handpicks the number and type of nodes which holds accurate data, and validates and/or reconciles it for an accurate result.
For a more thorough explanation, here is a great resource that helped us greatly!
Now, Imagine This
Let’s take a second to just imagine here.
For sporting fanatics — think of an NFT that you could own of your favourite sporting team that updates, in real-time, statistics, scores, and results of the team and its individual players. How about even being able to see trade rumours, or confirmed transfers?
For music lovers — think of an NFT of your favourite singer or band that can also double up as a verifiable concert ticket to their shows, a bulletin board for all their upcoming shows, and as a record player that is regularly updated with their latest album?
For gaming enthusiasts — think of your avatar NFT that develops, evolves, and gains experience as you utilise them in games. With each victory, see the numbers on your NFT increase and grow to mirror the growth of your character.
Now before we go further down the dream lane. Let’s take a look at some Dynamic NFTs in the market already.
Ether Cards x Lamelo Ball
Founded in the first quarter of 2021, Ether Cards is an NFT gamification and monetisation framework that bridges physical and digital realities through real-world utility. This allows celebrities, projects, or companies to connect with communities while also unlocking new monetisation channels.
With more than 50 years of combined experience, the team behind Ether cards consists of industry veterans and experts that have worked with the likes of Chainlink, Brave, Mike Tyson, Steve Aoki, and NBA star Lamelo Ball.
Recently, NBA player Lamelo Ball created a Dynamic NFT which is tied to his real-life assists during his NBA career. Once the NFT is bought, it stays up to date in accordance with his assist count in the league. This NFT continues to appreciate a value, especially if Lamelo continues to play like last season.
The project raked in over a cool USD$1 million and counting.
merge. by Pak
Created by Pak, merge. is an NFT project whose smart contract implements a scarcity mechanism into the NFT themselves. The project revolves around “mass” and accumulating more mass.
During the two day open sale, 28,000 individuals collectively dropped over USD$90 million for the NFT project with each unit of mass going for USD$575. As collectors collects more mass, the merge. token in their wallet physically grows as more mass is collected,
The NFT’s smart contract is created in such a way that once mass is sold and transferred to another person’s wallet — those two mass tokens merge into one and grow. Once mass is merged, it cannot be broken down into smaller pieces which makes collecting harder over time as the number of collectors and circulation of mass tokens will always be getting smaller.
In earlier NFT waves, we see that individuality, special traits, and rarity drove the exorbitant prices of non-fungible tokens. However, Pak’s project is really about quantity collected — it simply is about acquiring more and growing your mass which allows your NFT to appreciate in value.
Dynamic NFT Game — Dreams Quest
DreamsQuest is an upcoming play-to-earn RPG game that utilises Dynamic trading card NFTs. Through the use of Dynamic NFTs to create in-game trading cards within the DreamsVerse that evolves based on a multitude of game-play factors, the project is on route to make a splash when it makes its debut later in the year.
According to the DreamsQuest site, these evolutions will primarily be based on the outcomes of the game where battles, quests, tournaments, and special scenarios affect NFT statistics — including environmental factors as well.
In essence, think of the card games you played growing up as a child. Remember how a character would sustain damage or succumb to death when hit with an attack? How about an exciting evolution that would occur when you’ve charged up enough energy? Do you remember casting spells or utilising potions that would upgrade your avatar’s stats?
Now, enter the Metaverse and watch it happening all in real time. Your NFTs are dynamic, ever-changing, and never stays the same — interacting with in-game data, external factors, and player-to-player gameplay.
It is important to note that one wave does not necessarily signal the end of another but rather builds on the features of its predecessor, marking the next phase in NFTs evolution. As we are currently going through the 4th wave of innovations with the adoption of NFTs from different mainstream industries, we see bigger industries take the lead and find alternative revenue sources for their business models with the creation of new product lines.
Considering the implications of this, Dynamic NFTs are likely to be the future of the entire economy of traditional or static non-fungibles in the near future.
In the next article, we will come to the conclusion of our NFT series. We hope you’ve enjoyed it so far and have caught something for yourself. As usual, Do Your Own Due Diligence (DYODD) and have fun in this exciting space!
IMPORTANT DISCLAIMER:
THIS IS NOT FINANCIAL ADVICE
Cryptocurrencies like NFTs are nascent and in very early-stage startups. They are heavily subjected to speculation on the secondary markets and should never be treated as a form of investment.
Our write-up is a humble attempt to show the technological advancements and innovation that the blockchain technology possesses.
Readers are advised to engage their own financial advisors and do their own due diligence before making their first purchase.
All information expressed here are in the views of the writer based on the date of article.
We are looking for industry leaders to co-create this together. Please write to [admin@defisingapore.io] for your interest to participate in this community-written project.
LESLIE DANIEL CHAN. Founder, DeFi Singapore
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Additional Disclaimer:
Leslie Daniel Chan is also the co-founder of Dreams Quest.