Dynamic NFTs Become a New Market Hotspot, Sui Ecosystem Welcomes Development Opportunities

After nearly two years of fervor, the NFT market seems to have entered a period of stagnation, with the prices of several well-known projects continuously declining. The reason lies in the fact that static NFTs, primarily PFPs, have reached a growth bottleneck, and the market needs a new narrative to explore incremental space. Against this backdrop, dynamic NFTs have become a new emerging hotspot in the market, with high expectations placed upon them.

However, dynamic NFTs place higher demands on the underlying infrastructure. The emergence of the new public chain Sui has successfully broken through this bottleneck. Sui implements smart contracts using the Move virtual machine and Move programming language, lowering the threshold for creators to innovate through dynamic NFTs, thereby unlocking more types of application scenarios and more attractive experiences. Developers can achieve upgrades, bundling, and grouping of dynamic NFTs, and generate real-time feedback on-chain based on the behavior changes of the NFTs.

Similar to static NFTs, dynamic NFTs also face the problem of insufficient liquidity in the early stages. To solve this issue, some innovative projects have emerged, dedicated to providing liquidity solutions for NFTs on the Sui ecosystem. These projects have developed a rich product matrix, including NFT AMM protocols, NFT lending, NFT fragmentation, NFT installment payments, and NFT/Token issuance platforms.

As the first one-stop scalable dynamic NFT liquidity application protocol in the Sui ecosystem, this type of project is committed to continuously exploring and leading the innovative direction of the crypto market. Through these platforms, users and developers can jointly explore the infinite potential of dynamic NFTs and enjoy the dividends brought by liquidity.

NFT2.0: Dynamic NFTs Become the Next Trend in the Market

The NFT market in 2023 seems to have entered a deep bear market, with the prices of several well-known projects continuously declining and overall purchasing sentiment being sluggish. Although Bitcoin Ordinals inscriptions briefly attracted attention in March, they failed to create a larger wave to rescue the sluggish NFT market.

The fundamental reason for this situation is the lack of new narrative logic for NFTs. In the first phase of the market (2021-2023), various JPEGs or PFPs reached a peak due to rampant speculation, after which their value gradually returned, and consumer attitudes became more rational, making it difficult to pay high prices for NFTs that lack practical value. Therefore, to expand the incremental market in the second phase, NFTs must enhance their practical value, such as using NFTs as tickets, memberships, identity verification, game items, investment targets, etc. The static NFTs of the first phase clearly cannot meet these demands, while the emerging dynamic NFTs have recently received widespread attention and have become a market hotspot.

Dynamic NFT (Dynamic NFT, abbreviated as dNFT) refers to NFTs in contrast to static NFTs. Most people encounter "static NFTs". Once static NFTs are minted, they cannot be changed, and their metadata (core attributes) are fixed and permanently immutable at the time of coding. This feature is very suitable for digital artworks such as videos, images, GIFs, and 3D models. Currently, static NFTs are mainly used in fields such as art projects, music photography, and sports competitions.

However, static NFTs have some limitations due to their fixed metadata and inability to be dynamically upgraded. In application scenarios such as tokenization of real-world assets and video games, where data needs to be continuously updated, static NFTs struggle to meet the demands. Dynamic NFTs address this issue effectively.

Dynamic NFTs can change based on external conditions, and smart contracts trigger updates to the dynamic NFT metadata. In addition to changing metadata, dynamic elements can also be implemented, such as minting NFTs based on specific conditions (like discovering hidden locations in AR applications). Dynamic NFTs can also trigger "hidden attributes" through user interactions, which originally do not exist in the metadata.

Dynamic NFTs can be applied in the following areas:

1. On-chain NFT passport: It can automatically update digital identity information, including residence, marital status, and contact information, without the need to replace digital identity documents.

2. Game: Players use NFTs to participate in P2E games, and the achievement data obtained in the game (such as online duration, win rate, MVP, etc.) will real-time affect the status of the NFTs held. Game developers can upgrade players' NFTs based on this data or group them with other high-level players to enhance the gaming experience. Additionally, real-time feedback can be generated on-chain based on changes in NFT behavior, achieving an open-ended game conclusion.

3. Virtual Real Estate: Dynamic NFTs can capture real estate details and possess the flexibility needed for specific information updates. For example, holding a property NFT for a certain plot of land, the NFT will change as market prices, supply and demand, and other factors fluctuate, and the price will vary accordingly.

4. Brand Dynamic Marketing: Utilize dynamic NFTs to integrate on-chain and off-chain data resources, design dynamic marketing plans that maximize benefits for the brand, ultimately expanding business links and enhancing product value.

Compared to static NFTs, dynamic NFTs are smarter, able to adapt to and reflect the circumstances of the external world in real-time, and can set limitations and rules, further enriching the application scenarios of NFTs. The new round of development for NFTs has just begun, and dynamic NFTs are expected to inject fresh blood into the NFT market, introducing more incremental value and continuously expanding the market size.

Sui provides an innovative foundation for dynamic NFTs

Static NFTs do not possess inherent operational logic; all empowerment is separate from the NFT itself. Its use is detached from the story and culture of the NFT. In contrast, dynamic NFTs have inherent operational logic, and the empowerment they provide is endogenous and can be directly showcased. The development prospects of dynamic NFTs are undoubtedly promising, but they face significant technical challenges in practice.

First of all, dynamic NFTs need to continuously modify or update metadata in the smart contract according to the source, which requires high basic hardware demands such as storage and transaction processing speed. Currently, static NFTs have developed best on Ethereum, mainly because the requirements are lower; however, high Gas fees and inefficient processing matching (with a TPS of only 15) make it difficult for Ethereum to develop dynamic NFTs, and other public chains face similar issues. The emergence of Sui has filled the gap in the development of dynamic NFTs.

The smart contracts of Sui are written in the Move language. The Move language is a smart contract language that can be compiled to run in blockchain environments that implement MoveVM. From its inception, it has taken into account various security issues related to blockchain and smart contracts, and has referenced some of the security designs of the RUST language.

Unlike many existing programming languages, the Move language is designed to support programs that securely interact with untrusted code, as well as static verification. The Move language has these security features because it discards all nonlinear logic based on flexibility considerations, does not support dynamic dispatch, nor recursive external calls, but instead uses concepts such as generics, global storage, and resources to implement some alternative programming patterns. For example, Move omits dynamic dispatch and recursive call features, which may lead to costly reentrancy vulnerabilities in other smart contract languages.

Compared to other public chains, Sui operates at an astonishing speed and scale—peaking at a throughput of 297,000 TPS, with the key to its performance lying in transaction parallelization.

In most blockchains, transactions must be ordered and placed into blocks for sequential execution; sequential execution unnecessarily limits the throughput of these chains, as most transactions are actually independent of each other. Since Sui requires explicit declaration of transaction dependencies, it is able to process them in parallel. In the case where a few transactions are interrelated, Sui can still sort and execute them sequentially. Since independent transactions can be verified in parallel, Sui can linearly increase throughput by adding more devices to each validating node, thereby enhancing scalability.

Sui not only has high throughput but also low latency. Its consensus algorithm focuses on minimizing the communication required between validating nodes to process transactions; unlike the immediate broadcast of traditional blockchains, Sui ensures a two-way handshake between the requester and the approving validators, resulting in simple transactions being verified almost instantly, while complex transactions can be executed within 2-3 seconds.

High throughput and low latency allow transactions on Sui to be easily integrated into dynamic NFT and other application scenarios that require real-time completion, such as games.

In addition, most blockchains have storage centered around accounts, while Sui's storage is designed around objects. Each object is owned by an address and is mutable by default, but can be set as immutable or shared among multiple addresses. Sui's Move smart contracts can receive these objects as input, operate on them, and return the objects as output. This is a completely different smart contract programming paradigm compared to Solidity or Rust, more expressive and simpler for the digital object representation of dynamic NFTs and crypto games.

By studying the code of MoveVM, we can clearly see that MoveVM separates the storage of data from the storage of the call stack (process logic), which is the biggest difference from EVM. For example, in EVM, to implement an ERC20 Token, logic must be written in a contract and the state of each user must be recorded. In MoveVM, however, user states (resources under account addresses) are stored independently, and program calls must comply with permission and mandatory rules regarding resources. Although some flexibility is sacrificed, significant improvements have been made in security and execution efficiency (which helps achieve concurrent execution).

Scalable Dynamic NFT Liquidity Application Protocol in the Sui Ecosystem

With the official launch of the Sui mainnet, dynamic NFTs are about to experience explosive growth, becoming the most eye-catching new trend in the crypto market. Of course, dynamic NFTs are just the first step, and various financial products surrounding dNFTs (i.e., NFTFi) are also essential. Especially for dNFTs, liquidity is the primary issue that needs to be addressed.

Traditional static NFT markets (such as Opensea) basically adopt an order book matching system, where sellers place orders or buyers make offers. This presents a problem: sometimes buyers and sellers have inconsistent price negotiations, which may result in two extreme situations where NFTs are priced but have no market, or have a market but no price; furthermore, when multiple buy orders need to be purchased in batches, it may incur high Gas fees.

To solve the liquidity problem of dynamic NFTs, some innovative projects have emerged in the Sui ecosystem. These projects are the award-winning works from the Sui hackathon and are currently online on the mainnet, focusing on one-stop aggregation trading for NFTs/Tokens.

Specifically, this type of project has launched multiple flagship products to meet market demands, including the NFT AMM protocol, NFT lending, NFT fragmentation, and NFT installment payments, as well as an NFT/Token issuance platform. Users do not need to navigate through multiple applications in the Sui ecosystem; a single Dapp can address all needs, equivalent to a combination of Uniswap + BenDAO + Opensea + Blur + Launchpad.

First of all, the NFT decentralized exchanges launched by these projects adopt the automated market maker (AMM) model. Liquidity providers (LPs) can deposit assets into single-sided or double-sided trading pools to provide liquidity for their preferred NFTs, and can choose to earn trading fees from the buy-sell spread. These platforms do not differentiate between different NFT IDs, which means that each NFT in the liquidity pool is bound to the current price coefficient, and users willing to buy and sell NFTs get the same price from the NFT pool when trading, regardless of whether the NFT ID is rare. In addition, these platforms support one-click purchases and bulk purchases, which can effectively save Gas fees.

In addition to supporting NFT trading, these platforms also support the native tokens of Sui and all tokens bridged to the Sui ecosystem for trading through AMM. Compared to Uniswap V2, these platforms have lower slippage, lower Gas fees, and a smoother user experience.

It is important to note that, compared to traditional NFT markets, these platforms address many issues by adopting the NFT AMM model. In traditional markets, the filtering functions for each NFT Collection vary, while these platforms achieve a more flexible filtering function by calling the tags of each Collection contract, allowing users to more conveniently find NFTs that meet their needs.

In addition, these projects have also launched an NFT lending market to unlock the value of dynamic NFT assets.