NFT 2.0 – What is it?
NFT 2.0 refers to the second version of NFT 1.0 and relies on the functioning of NFT 1.0. This upcoming iteration will integrate new features and advancements into the NFT 1.0 infrastructure. While NFT 1.0 enables ownership of distinct, tokenized digital assets, NFT 2.0 will expand the horizons by creating new markets and introducing advanced use cases, unlocking a plethora of possibilities.
NFT 2.0 will grant token holders expanded capabilities to leverage their tokenized assets for various purposes, including co-ownership, composability, interactivity, and more. These possibilities involve use cases, such as music, in-game items, tickets, digital collectables, coupons, and the NFT 1.0 digital art.
Types of NFT 2.0
- Interactive NFTs – Interactive NFTs are dynamic in nature, which allows users to interact with them and other NFTs. One of the projects that are working on interactive NFTs is cryptorchids.
- Smart NFTs – Smart NFTs have added a new layer of functionality and programmability. Smart NFTs include a number of properties, such as upgradable and time-limited, that can not only enable more digital efficiency but open new creative opportunities for creators, brands, crypto enthusiasts, and users.
- Programmable NFTs – Programmable NFTs are not only unique in their characteristics but also in their abilities, as they can carry with them programmable code, enabling new and innovative use cases that were previously impossible.
Characteristics of NFT 2.0
- Extensible – For an NFT to be regarded as the 2.0 variant, it should be extensible, which signifies it requires to be able to connect to other NFTs or projects in a meaningful way.
- Upgradability – This characteristic ensures that the NFT can be updated far into the future. The updates can be to the artwork, select metadata, the addition of new resources, etc.
- Dynamism – This attribute empowers NFTs to surpass their current capabilities. Depending on the owner or creator, NFTs now possess the ability to issue commands, equip other NFTs, alter their appearance, and accomplish various additional tasks.
Abilities of NFT 2.0
- Enhanced metadata – Enhanced metadata is a notable feature of NFT 2.0, enabling the creation of enriched metadata that offers comprehensive context and information about an asset. This enhanced metadata encompasses details such as the artist’s background, the asset’s history, and even its environmental footprint.
- Nested NFTs – Using the nested ability, NFTs can own and be owned by other NFTs. The developer of the NFT 2.0 protocol, has developed infinite nesting, which suggests one NFT can be owned by another NFT, which can be further own multiple NFTs, and the cycle continues.
- Multi-resource NFTs – NFTs can have distinct resources to switch between. The resources include video, image, and other media that is the NFT. Hence, despite having a single picture, the NFT can have two and select which one to show.
- Reactive NFTs – Reactive NFTs are formed by conditional rendering, which signifies that an NFT changes its resource depending upon certain criteria being fulfilled. For example, the NFT of a landscape based on the time of day, alters itself.
- NFT DAOs – Sometimes the cost of NFTs may be prohibitively high for individual collectors. However, through the utilization of DAO (Decentralized Autonomous Organization) functionality, multiple collectors can pool their resources to collectively acquire the NFT. Following the purchase, the NFT will have tokens associated with it, which will be distributed among the collectors based on the proportionate weight of their investments.
- Rental NFTs – Rental NFTs, also known as “rental” NFTs, refer to NFTs that function as digital assets available for rental or lease. For instance, a collector could rent an NFT representing a digital artwork or collectible for a specific duration, enabling them to appreciate the asset without full ownership. Rental NFTs 2.0 offer the potential for creating marketplaces dedicated to renting digital assets.
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Possible applications of NFT 2.0
- Robust NFT Storage – The implementation of multi-resource functionality enhances the durability of NFT storage. Currently, the majority of NFTs are stored on IPFS. However, IPFS requires content to be actively interacted with, or else users must pay to pin their content to nodes.
With the introduction of these new resources, NFTs will no longer rely solely on IPFS for storage. Instead, they will utilize an alternative service, thereby decentralizing the storage further and ensuring the NFT’s long-term availability with increased redundancy.
- Music Label DAO – Contemporary music thrives on collaborative efforts spanning across the globe. Through the utilization of NFT 2.0, a record label DAO can revolutionize the way musicians work together, avoiding conflicts and excessive exploitation.
To illustrate, a record label DAO consisting of talented musicians and enthusiasts can organize themselves into groups based on their respective creative roles. Sample producers can focus on developing samples, drum producers can contribute drums, songwriters can create demos, artists can record vocals, and so on, until the song is completed. The decentralized NFT single can be developed by enabling the DAO members to vote on the additions they deem favorable. This way, a decentralized NFT album can be gradually assembled, one song at a time.
- Dog Rescue NFTs – Dog rescue NFTs depict shelter pups that users cannot physically adopt but can provide remote care for, primarily through financial support until the pup finds a permanent home. Even in high-risk shelters, the purchased NFT represents ongoing financial support for the pup, acting as a form of “rent” paid by the owner. Additionally, the owner continues to pay ongoing “tax” on the NFT, covering medical expenses and food costs. As an added benefit, the owner receives progress photos as supplementary resources within the NFT.
- Sports NFTs – The sports industry is experiencing significant advantages through this evolution. NFT 2.0 offers the capability to generate distinctive digital collectibles that symbolize ownership of sports memorabilia.
Furthermore, it can be employed to create digital tickets and immersive fan experiences, as well as represent athletes and their sponsorships, thereby introducing novel avenues for revenue and endorsement agreements. Lastly, NFT 2.0 can serve as a representation of digital assets utilized in fantasy sports and gaming, including virtual teams and players that mimic the performance of real-life athletes.
- Metaverse NFTs – Utilizing NFT 2.0, it becomes possible to symbolize the ownership of real estate assets, thereby enabling fractional ownership of high-value properties . This groundbreaking advancement creates fresh avenues for investment and ownership in the realm of real estate. For example, an NFT representing a property should possess dynamic characteristics that can dynamically update to reflect real-time information such as maintenance history, age, market value, and other pertinent details.
Metaplex has introduced a new standard for Solana NFTs called “Programmable NFTs,” which aims to enforce creator royalties. These NFTs empower creators by allowing them to determine which protocols their NFTs can interact with using customizable allow and deny lists. By utilizing this functionality, creators can prevent their collections from being traded on marketplaces that do not support royalties. These innovative features offer creators and NFT owners greater flexibility, creativity, and functionality, leading to broader adoption and usage of NFTs in various industries and applications.
Specifically, NFT 2.0 exhibits adaptability across various scenarios. It finds utility in the music industry by facilitating rights management for songs, in gaming by representing evolving characters or utilized tools, in the sports industry by managing event access and creating collectible digital memorabilia, in the metaverse by symbolizing aging land parcels or buildings that accrue historical value, and even in the medical and engineering fields as a method to represent and certify the current status of refurbished machinery.
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