Smart NFTs

In recent years, we've seen an enormous increase in NFTs and the creator communities built around it. The usual idea of an NFT would come from creating a digital twin of a physical object or artwork that can be uniquely identified and marked ownership of in a decentralised ecosystem. The value of an NFT lies in the uniqueness and rarity of it as well as how the market values it.

Some projects have tried incorporating NFTs in their regular usage to add "utility" over these NFTs to provide actionable value to the end user. It's clear that the ecosystem is waking up to a deeper value to NFTs beyond the trading aspect of it. If we have to compare, it can come closer to the early days of digital tokens when Bitcoin used to be only a store of value and the only use of it was to trade it. Then Ethereum came up with smart contracts and it added additional utility over the digital tokens. Some very unique use-cases have emerged since including non-fungible tokens, or NFTs.

The lack of value beyond what the market determines for PFP(Profile Pictures) NFTs is a dead end. Presently, the only reason anybody would mint NFT would be, to place it on a market and trade it so they can earn out of it. For any new artists, this means large scale marketing and promotional activities. But once someone acquire such NFTs, there is not much that can be done with it other than hoping that the value of it rises over time given the rarity of it and hopefully re-list at a later stage on some marketplace. Even when we have some NFTs on our wallet. There's really not much to do with it. So, what is the added value to it apart from any other fungible tokens?

Smart NFTs or sometimes termed as NFT2.0 is the next step in the evolution of NFTs which creates and distributes NFTs with programmable and actionable utility.

Adding utility to an NFT shouldn't be limited to making it more actionable programmatically, but also design-wise. A step towards this direction is another very unique variation called as Dynamic NFTs, as introduced in this article by Chainlink. Dynamic NFTs (dNFTs) are expanding the design space that NFTs are able to address through their ability to adapt and change in response to external events and data.