NFT 2.0: Beyond Digital Art - Unlocking New Use Cases and Functionalities

The first NFTs (non-fungible tokens), which appeared in the 2010s and only became more widely recognised in 2021, were mainly aimed at the digital art and collectibles sector, providing creators with new ways to monetise and unique ownership of digital assets. However, as the NFT market evolves, it is moving from just asset ownership to a new, advanced phase often referred to as NFT 2.0. This evolution brings with it additional functionality and applications that make NFTs more universal, interactive and useful across industries.

What is NFT 2.0?

NFT 2.0 goes beyond the initial concept of static ownership, introducing functionalities that allow NFTs to be dynamic, interactive, and programmable. This shift opens doors for use cases in sectors like gaming, real estate, intellectual property, and even supply chain management. At its core, NFT 2.0 emphasizes utility, embedding features that adapt to changing needs and contexts.

Key innovations in NFT 2.0

1. Dynamic Metadata: Unlike traditional NFTs where metadata (e.g., visual design or descriptive details) is static, NFT 2.0 allows it to be dynamically updated. This capability also makes NFTs ideal for interactive games, where assets can evolve based on a player's decisions or achievements.
2. Compatibility and Cross-Platform Use: NFT 2.0 tokens are designed to be compatible with different blockchain ecosystems and digital spaces. In gaming, for example, this compatibility means that in-game assets can be used in multiple games and even on completely different platforms.?
3. Improved Intellectual Property (IP) Rights Management: NFT 2.0 also introduces more sophisticated rights management, allowing creators to keep control over how their NFTs are used and monetised. Some platforms are experimenting with ‘’enforced royalty‘’ NFTs, which automatically pay royalties to the original creators each time an NFT is re-sold. This feature can provide ongoing financial benefit to creators and make it easier to track IP rights to digital assets.
4. Programmable Actions and Smart Contracts: One of the most promising advances of NFT 2.0 is the ability to incorporate smart contracts that perform certain actions based on pre-defined triggers. This feature is very useful in Decentralised Finance (DeFi), where NFTs can represent a? staked asset or serve as collateral. For example, when certain conditions are met (e.g. a price threshold is reached), a smart contract can automatically trigger a sale or transfer.
5. Fractional Ownership and Crowdsourced Investments: NFT 2.0 also introduces fractional ownership, where users can buy ‘shares’ of high-value NFTs. This fractional ownership model democratizes ownership by allowing multiple users to collectively invest in NFTs. This application has the potential to transform industries such as real estate, where an NFT can represent physical property, allowing multiple stakeholders to share in its value and benefits.

NFT 2.0 Most notable Token standards

• ERC - 6059/7401 -? Nestable NFTs with a parent-child relationship
• ERC - 6381 - NFT with a feedback mechanism: Emotes that can be attached to NFT and increase/decrease its value on the second market
• ERC-3525 - Semi-Fungible Tokens: financial assets representation
• ERC - 6220 - Composable NFTs
• ERC - 3643 - RWA Tokenization standard
• ERC - 6956 - Asset-Bound NFT

NFT 2.0 uses in the real world

Supply Chain and Product Authentication: NFT 2.0 provides secure and traceable records, making it ideal for authenticating and tracking products in supply chains. For luxury brands, an NFT attached to a physical item (such as a watch or handbag) provides proof of authenticity, preventing fakes.?

NFT in the Creative Economy: Musicians, writers and artists can now use NFT 2.0 to tokenise their work by incorporating dynamic features such as royalties or unlocking exclusive content into an asset.?

Decentralized Identity Verification: NFT 2.0 has the potential to change the way identities are verified in the digital space. By tokenising personal information in NFT, users will be able to share only the necessary data with various platforms while maintaining control over their digital identity. This feature is in line with growing concerns about data privacy and security, offering users a secure, decentralized alternative to traditional identity management systems.

NFT 2.0 Project Examples

CryptOrchids - plant NFTs with which user needs to interact by watering them, so they don't die

Unitbox- NFT rental protocol

Circulaid - Traceable Verification of fashion product lifecycle

Loafty, RealT - web3 property renting and fractional ownership platforms

Aavegotchi - NFT ghosts that have complex dynamic rarity and characteristics

NFTfi - Platform, where users can utilize NFTs by borrowing a loan against them

RMRK - NFT with evolution, parent-child interactions, emotable and other ERC standards https://evm.rmrk.app/modules-overview?

NFT 2.0 future or outlook?

NFT 2.0 expands the scope and value of digital assets, transforming them from mere collectibles to tools with real-world utility across many industries. As industries explore and adopt these enhanced functionalities, NFTs will play an increasingly important role in determining ownership of digital assets, rights management, and interoperability in the Web3 ecosystem.

The evolution of NFTs into universal, multi-functional assets makes this technology highly attractive to businesses, investors and individual creators.