Pandora Protocol: A Concise Guide to Dynamic NFTs

Ankit Raj
4 min readMar 19, 2021


The crypto world has seen an immense surge in the use of non-fungible tokens (NFTs). While NFTs are making headlines everywhere for revolutionising asset trading, they are also constantly evolving. This is where dynamic NFTs come in. Let us find out what dynamic NFTs are and how they function.

A Brief overview of NFTs

Non Fungible Tokens or NFTs are cryptographically secured tokens that represent an asset. They typically exist on blockchains. In simpler words, NFTs are digital tokens that represent unique assets and facilitate ownership tracking and trade of these assets. These assets could be digital, or they could represent real-world items. For instance, NFTs of digital art can be bought or traded on crypto platforms.

Like bitcoin and other cryptocurrencies, NFTs are implemented with the help of blockchains. Unlike cryptocurrency, each NFT is unique and non-interchangeable. The blockchain is a medium for storing unique assets and related data. Through blockchains, NFTs become globally accessible and gain high liquidity. Blockchain-based NFTs give non-fungible assets a secure environment to store all data related to an asset from the time of its origin.

Decentralised platforms like blockchain enable free trade of non-fungible assets. However, it has certain limitations. Blockchains provide a decentralised and protected environment for NFTs by disconnecting them from all other systems; hence blockchain-based NFTs cannot interact with data outside the blockchain. To resolve this, dynamic NFTs came into existence.

How are NFTs made dynamic?

The previously mentioned connectivity problem of NFTs is resolved with ‘Oracles’ that allow NFTs to interact with external data. Oracles are essentially data feeds from external systems that allow smart contracts to receive information from outside the blockchain.

These oracles play a key part in the evolution of NFTs from static to dynamic. Dynamic NFTs are essentially permanent smart contracts that use oracles to interact with external data and systems.

In other words, dynamic NFTs are tokens that react and respond to external conditions, either on-chain or off-chain. For example, an online game character could be represented as an NFT; say you own this character, and you have other items that you can equip on this character. This can be updated through a dynamic NFT. The other items can be included in your NFT and can be traded with ease. With this, the value of said NFT may also change.

Role of Oracles and Dynamic NFTs

With oracle, developers can connect any blockchain with data sources from other chains and real-world data securely and reliably. It is essentially a decentralised oracle network.

With multiple oracles to transfer data from various sources, the oracle framework enables users to transfer and source data to the smart contracts ( NFTs) without any room for error.

How does oracle actually make NFTs Dynamic?

With oracle, developers can securely link their NFTs to IoT (Internet of Things) data, web applications and several other data sources. These connections can be used to create dynamic NFTs that interact with data and integrate with existing infrastructure.

What this implies is that oracle nodes can create random numbers that can be imparted to smart contracts, and these data’s provides dynamic properties to the NFTs through verifiable randomness.

In addition to these, the oracle can enhance the dynamic nature of the NFTs by attaching real-world outcomes or events to digital assets. What if cards in an online game had values based on the stats of real-life players. The player’s performance statistics could determine the worth of the NFTs and decide the winners of the game.

The scope of Dynamic Tokens: How are Dynamic NFTs currently minted?

Several use-cases are accessible to users for the minting of dynamic NFTs. Oracles can connect NFTs to the data that is required for various functions. Let us take a look at some ways dynamic NFTs are used to understand their benefits better

  1. Competition Based NFTs: Oracles utilise data from various sources to transfer NFTs and resolve competitions by calculating and assigning value to the assets.
  • Verifiable randomness: We know that random traits are applied to NFTs. In online games. This ensures fair and unbiased randomness and each item’s rarity and worth can be determined when the NFTs are minted.
  • Performance games: Inside certain games, NFTs are transferred between players based on their performance. Players compete in games and win or lose in-game NFTs. When an item is lost, it is randomly placed in the game environment. Oracle is also used to retrieve off-chain performance data and link it to the smart contract that can transfer ownership of items
  • Real-world augmentation: Oracle can also allow NFTs to be minted in real-world locations where users can complete for them in real-life. One can think of this as something similar to Pokemon GO’s popular game where the game interface provided a real-world experience.
  • Reward and Governance Systems: Certain projects are being worked upon where users on the chain can be rewarded with NFTs upon completion of real-world activities or other achievements. Some instances of this are:

- Consumer Participation rewards: Brands can reward long-term consumers by minting limited offer coupons as NFTs that are linked to the customer’s participation. Oracle can use IoT data to keep tabs on participation

  • Crowd-Sourced Voting: From decisions like deciding which trading card will be minted next to the distribution of hedge-funds among investors, oracles can serve as unbiased vote aggregators. They can source and deliver the data to smart contracts that are responsible for ownership transfers.

Pandora is working on tokenising real-world assets with dynamic NFT functionality. We have onboarded a few early partners. We will be releasing a few more info’s around it in the next few weeks.

We at Pandora are committed to bringing the real-world and digital assets accessible globally on-chain. If you want to be part of the journey, you can connect with us.

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Ankit Raj

Blockchain Engineer | Distributed system | Ex- Red Hat | Ethereum foundation grantee