Non-fungible tokens became all the rage in 2021 as collections like BAYC and CryptoPunks made headlines, selling for multi-million dollar prices in some cases. That year, digital artists like Beeple also emerged, creating pixelated masterpieces that raked in millions more. Yet fast-forward about a year and the price of NFTs had drastically declined, with many beginning to question why these digital assets should command such high values. 

In recent months, the NFT space has begun to provide the answer to those questions. Because NFTs can be linked to physical assets as well as digital ones, they can provide utility that goes beyond assigning ownership to a simple JPEG. 

Utility NFTs are a special kind of digital asset that has practical applications in the real world. Already, we have seen some examples of this. For instance, NFTs collections such as BAYC, which once had no utility at all, now entitle holders to exclusive token airprops and access to events in the real world, such as conferences and parties at nightclubs. 

Now, through a process called “token-gating”, creators can also lock products, content and experiences behind their NFTs. It provides them with new ways to add tangible value. In video games, NFTs can be used to represent in-game assets such as weapons, characters and skins that give players a significant advantage over other players. In the metaverse, NFTs can be minted that assign ownership of digital real estate to individuals. NFTs can also provide passive income opportunities in DeFi, through staking, yield farming and royalties. They can also represent fractional ownership of real-world assets such as businesses, real estate and art. 

Introducing Dynamic NFTs

The advent of utility NFTs has helped give birth to a newer concept, known as the “Dynamic NFT”, which brings the functionality of digital assets up another notch. 

Dynamic NFTs are digital assets with programmable and interactive capabilities that allow them to evolve over time, enabling artists, creators and businesses to offer more engaging and rewarding experiences to the people who own them. The architecture of Dynamic NFTs is designed in such a way that the asset can respond to external events, conditions and other factors, such as the holder’s behavior, time, weather conditions and real-time market prices. 

A good example of a dynamic NFT is Pearpop, a Web3 social media app that allows users to mint NFTs of each post they make on the network. Because these NFTs are dynamic, their rank will increase or decrease based on the popularity of that post. So the more likes, comments and shares it attracts, the higher its value becomes. 

Setting The Stage 

Dynamic NFTs are a relatively new concept but their promise has already been recognized by the Web3 startup Peer, which is building an augmented reality-based social network that will be mapped to the real world. With this blockchain-based AR world, They are hoping to create a global ecosystem through which Dynamic NFTs can provide unique experiences. 

It will be like Pokemon Go on steroids, with an AR world overlaid onto the real world and driven by a patented fluid timeline that makes it possible to browse interactive content based on your location. Everything will live on Peer’s blockchain, where it will be tagged to a place, time and person. 

Peer will also revolve heavily around the concept of Dynamic NFTs that can activate experiences in the real world. According to the company, its NFTs will have two distinct settings. The Dynamo settings will dictate how its NFTs can interact with other digital assets, meaning they can be used for player-vs-player battles or evolve in other ways. Meanwhile, their Meta settings will control things such as how, when and where the NFTs will appear, so users can mint them in the real world. In this way, a business can create utility NFTs that provide access to some kind of reward, and establish conditions for minting them – such as the user has to collect NFTs hidden within their city, for example. It provides lots of scope for NFTs to be used for promotional purposes. 

Peer believes that the only thing required to enable mass adoption of Dynamic NFTs is to create a big, globe-spanning playground in which they can thrive. That’s why it’s building a Web3 social app that it says will drive real utility for NFTs. It will be a place that’s inextricably linked to people’s real world lives, where they can connect with their friends and derive real benefits on a day-to-day basis. 

An ambitious vision perhaps, but Peer thinks it has hit upon a winning combination, catering to people’s desire for technology that intersects with the real world and incentivizes them to get outside and seek new experiences. Dynamic NFTs, which can evolve and provide physical benefits to their holders, are the magic that will make it happen.