The Rise of Dynamic NFT Markets: The Sui Ecosystem Welcomes New Opportunities

With the cooling of the NFT market over the past two years, static NFTs dominated by PFPs have entered a growth bottleneck. The market is seeking new narratives to unlock incremental markets, and dynamic NFTs have become a rising hotspot, garnering much attention.

Dynamic NFTs place higher demands on underlying infrastructure, and the emergence of the new public chain Sui provides a solution for this. Sui uses the Move virtual machine and Move programming language to implement smart contracts, lowering the barrier for creators to innovate through dynamic NFTs, thereby unlocking more types of use cases and more engaging application experiences. Developers can implement upgrades, bundling, and grouping of dynamic NFTs, and generate real-time feedback on the blockchain based on the behavior changes of the NFTs.

Similar to static NFTs, dynamic NFTs initially face the issue of insufficient liquidity. To address this problem, some projects have begun to focus on providing liquidity solutions for NFTs on the Sui ecosystem, including a variety of products such as NFT AMM protocols, NFT lending, NFT fragmentation, and NFT installment payments.

NFT 2.0: Dynamic NFTs Become the New Trend in the Market

The NFT market in 2023 seems to be in a slump, with the floor prices of several well-known projects continuously declining and overall purchasing sentiment being low. Even with new hotspots like Bitcoin Ordinals inscriptions, it has still not been able to reverse the downturn in the NFT market.

The root cause of this situation is the lack of a new narrative logic for NFTs. Various JPEGs or PFPs in the first phase of the market (2021-2023) gradually returned to rational value after experiencing frenzied speculation. Consumers are no longer willing to pay high prices for NFTs that lack practical value. Therefore, in order for NFTs to expand the incremental market in the second phase, they must enhance their practical value, such as using NFTs as tickets, memberships, identities, game items, or investment targets. The static NFTs from the first phase can no longer meet these needs, which is why emerging dynamic NFTs are favored by the market.

Dynamic NFTs, also known as dNFTs, are in contrast to static NFTs. Most of the NFTs we encounter are static, and once minted, they cannot be changed on the chain. However, dynamic NFTs can change based on external conditions, and their smart contracts can trigger updates to the metadata. In addition to changing metadata, dynamic NFTs can also implement other dynamic elements, such as minting based on specific conditions or triggering "hidden attributes" through user interactions.

The application scenarios of dynamic NFTs are broad, including:

1. On-chain NFT passport: can automatically update digital identity information, such as residence, marital status, and contact information.

2. Game: Players' NFTs can have their status updated in real-time based on game achievements, and developers can upgrade or group NFTs accordingly to enhance the gaming experience.

3. Virtual Real Estate: Dynamic NFTs can reflect the changing factors such as real estate prices, duration, and ownership.

4. Brand Dynamic Marketing: Utilize on-chain and off-chain data resources to design optimized dynamic marketing solutions for brands, expand commercial channels, and enhance product value.

Compared to static NFTs, dynamic NFTs are smarter, capable of adapting to and reflecting changes in the external environment in real-time. They can also set specific restrictions and rules, greatly enriching the application scenarios of NFTs. The new round of development in the NFT market has just begun, and dynamic NFTs are expected to inject new vitality into the market, attracting more incremental users and continuously expanding the market scale.

Sui provides an innovative foundation for dynamic NFTs

Static NFTs do not possess intrinsic operational logic, and their empowerment is separate from the NFT entity. In contrast, dynamic NFTs have intrinsic operational logic, and the empowerment they provide is endogenous and can be displayed directly. Although dynamic NFTs have a broad development outlook, they still face technical challenges in practical implementation.

First, dynamic NFTs need to continuously modify or update metadata in the smart contract based on the source, which places higher demands on the underlying hardware such as storage and transaction processing speed. Currently, static NFTs have developed the most maturely on Ethereum, mainly because the requirements for these are lower. However, the high Gas fees and inefficient processing capability of Ethereum (with a TPS of only 15) make it difficult to support the development of dynamic NFTs, and other public chains face similar issues. The emergence of Sui has addressed the shortcomings in the development of dynamic NFTs.

The smart contracts of Sui are written in the Move language. The Move language was designed with the security issues of blockchain and smart contracts in mind from the very beginning, borrowing some security designs from the RUST language. The Move language supports the writing of programs that securely interact with untrusted code, while also supporting static verification. To achieve these security features, Move abandons non-linear logic based on flexibility considerations, does not support dynamic dispatch and recursive external calls, and instead uses concepts such as generics, global storage, and resources to implement alternative programming models.

Compared to other public chains, Sui's performance advantages are significant, with a peak throughput of up to 297,000 TPS. Its performance advantages mainly stem from transaction parallelization. Most blockchains require transactions to be ordered and executed sequentially in blocks, which unnecessarily limits throughput. Sui requires a clear specification of the dependency relationships of transactions, allowing for the parallel processing of independent transactions. In the rare cases where transactions are interrelated, Sui can still sort them and execute them in order. Since independent transactions can be verified in parallel, Sui can linearly increase throughput by adding devices for each validating node.

Sui not only has high throughput but also low latency. Its consensus algorithm aims to reduce the communication required for processing transactions between validating nodes. Unlike the immediate broadcast of traditional blockchains that is discarded, Sui ensures a two-way handshake between the requester and the approving validator, allowing simple transactions to be verified almost instantly and complex transactions to be executed within 2-3 seconds.

High throughput and low latency make transactions on Sui easily integrable into dynamic NFTs and other applications that require real-time completion, such as games.

In addition, Sui's storage is designed around objects, rather than the account-centric storage method used by most blockchains. Each object is owned by an address, is mutable by default, and can also be set as immutable or shared among multiple addresses. Sui's Move smart contracts can accept these objects as inputs, manipulate them, and return objects as outputs. This programming paradigm is completely different from Solidity or Rust, being more expressive and better suited for representing dynamic NFTs and digital objects in crypto games.

By studying the code of MoveVM, it can be found that MoveVM separates data storage from the storage of the call stack (process logic), which is the biggest difference from EVM. For example, implementing ERC20 Token in EVM requires writing logic in a single contract and recording the state of each user. In MoveVM, user states (resources under account addresses) are stored independently, and program calls must comply with mandatory rules related to permissions and resources. Although a certain degree of flexibility is sacrificed, there is a significant improvement in security and execution efficiency (which helps achieve concurrent execution).

Scalable Dynamic NFT Liquidity Application Protocol Based on Sui

With the official launch of the Sui mainnet, dynamic NFTs are expected to experience explosive growth and become the most eye-catching new trend in the crypto market. However, various financial products surrounding dynamic NFTs (i.e., NFTFi) are also essential. For dynamic NFTs, solving the liquidity issue is crucial.

Traditional static NFT markets like Opensea mainly use an order book matching system, which leads to inconsistencies in price negotiations between buyers and sellers, resulting in NFTs being priced but not traded, or traded but not priced. Additionally, multiple buy orders need to be purchased in batches, incurring high Gas fees.

To solve the liquidity problem of dynamic NFTs, the first scalable dynamic NFT liquidity application protocol in the Sui ecosystem has emerged. This protocol is a prize-winning project from the Sui Hackathon Vietnam station and is now live on the mainnet, focusing on one-stop aggregated trading for NFTs/Tokens.

Specifically, the protocol has launched several flagship products to meet market demands, including NFT AMM protocol, NFT lending, NFT fragmentation, and NFT installment payments, as well as NFT/Token Launchpad. Users do not need to navigate multiple applications in the Sui ecosystem; one Dapp can solve all needs.

First, the decentralized exchange for NFTs launched by this protocol adopts the automated market maker (AMM) model. Liquidity providers can deposit assets into either single-sided or double-sided trading pools to provide liquidity for their preferred NFTs and can choose to collect transaction fees based on the bid-ask spread. The protocol does not differentiate between different NFT IDs, meaning that every NFT in the liquidity pool is bound to the current price coefficient, and users willing to buy or sell NFTs receive the same price from the NFT pool during transactions, regardless of whether the NFT ID is rare or not. Additionally, the protocol supports one-click purchases and bulk purchases, which can effectively save on Gas fees.

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

It is important to note that, compared to traditional NFT markets that have limitations, this protocol solves many problems by adopting an NFT AMM model. In traditional markets, the filtering functions of each NFT Collection vary, while this protocol achieves a more flexible filtering function by calling the labels of each Collection contract, enabling users to more easily find NFTs that meet their needs.

In addition, the protocol has launched an NFT lending market to unlock the value of dynamic NFT assets. NFT holders can collateralize their NFTs to obtain stablecoins or Sui tokens, thereby alleviating cash flow pressure. The peer-to-pool matching lending system connects borrowers and lenders through liquidity pools and implements a robust liquidation system to ensure the safety of the lent NFTs and protect the interests of the lenders.

The protocol also offers an NFT installment payment feature through its peer-to-pool trading system. Users can purchase the NFTs they want through installment payments without the need to pay the full price upfront, thereby promoting further growth and adoption of NFTs in the market.

Considering that the price of NFTs rises after they develop into blue-chip projects, making it difficult for ordinary retail investors to participate, the protocol also introduces the NFT fragmentation feature, allowing users to convert their favorite NFTs into tokens that represent partial ownership of the underlying NFT. These tokens can be freely traded on the platform, enabling users to access a variety of NFTs without having to own the entire asset. This feature increases the liquidity of the entire NFT market and makes access to valuable NFTs more democratic.

Finally, the protocol launched an innovative Launchpad, providing automated fundraising tools and a one-stop liquidity solution for all projects (NFT, Token). Developers can customize Token/NFT issuance, claims, and other rules before the fundraising campaign, effectively reducing development and market-making costs by simply setting the fundraising terms.

Overall, this protocol is the first community-driven multi-protocol platform built on the Sui ecosystem, aiming to create broader network effects by integrating various decentralized markets and tools to inject more liquidity into the market.

Compared to other blockchains, Sui provides more robust support for the development of dynamic NFTs at the underlying infrastructure level. The Move language it employs lowers the barriers for creators to innovate with dynamic NFTs, thereby unlocking more types of use cases and more engaging applications and experiences. Although many innovative projects and applications are yet to be tested by the market due to the relatively short time since the Sui mainnet launch, it is certain that with Sui's involvement, the momentum of the dynamic NFT market will continue to accelerate.

As the first one-stop scalable dynamic NFT liquidity application protocol based on Sui, this project continuously explores and leads the innovative direction of the crypto market. Its secure and efficient trading environment and rich liquidity solutions inject new vitality into the NFT market. Through this