Non-fungible Tokens (NFTs) have taken the world by storm in recent years, altering how we see ownership and digital assets. While NFTs have already had a considerable influence, the technology is currently transitioning from its 1.0 age of static and non-interactive NFTs to its 2.0 era of dynamic, interactive, generative, and "living" NFTs.

Before Now

NFTs began gaining widespread attention in 2017 with the emergence of CryptoKitties, a blockchain-based game where users could collect, breed, and trade unique digital cats. These digital collectibles were among the first examples of NFTs, which are blockchain tokens representing digital ownership of unique, indivisible assets, now categorized as NFT 1.0 tokens. NFTs from then on gained more traction in various domains, ranging from art and music to virtual real estate and gaming items. However, these NFTs were rather non-interactive, thus limiting their usefulness to mostly proof of ownership tokens, collectibles, and a few more. Leading to the proposition and creation of newer standards of development to enable more and better functionalities for NFTs.

NFT 2.0

The evolution of NFTs has seen these assets move from being static tokens, mostly representing ownership of digital or physical items, to being more dynamic and offering a wider variety of use cases for both creators and collectors/owners alike. And this dynamism is possible because of the creation of newer non-fungible token standards looking to add more functionality to NFTs. Similarly, as the earlier token standards examples of which are the ERC-721, ERC-1155, ERC-998, BEP-721, BEP-1155, and SIP-009 enabled the tokenization of ownership for items so also are these newer standards pushing beyond proof of ownership to creating more interesting NFTs that allows for multiple uses.

Some of the newer token standards of NFT 2.0 evolution are:

I. ERC-5773: Multi-Asset NFT

The multi-asset NFT standard enables an NFT to be multifaceted and can serve as different forms for different uses. For example, an NFT can function as an Avatar in a game and also appear as a media file when accessed through a media platform. This would make NFTs created using this standard have multiple functions, causing both an increase in value and desirability among users.

II. ERC-6956: Asset-Based NFT

This token standard allows for the anchoring of tokens to digital or physical assets at 1:1. It provides for the transfer of these NFTs by authenticating the control of the asset involved, i.e. the tokenized item.

III. ERC-6059: Parent-Governed Nestable NFT

This token standard allows for an NFT to own other NFTs. Simply put, it allows a kind of parent-child relationship between NFTs, where an NFT can be the parent of another NFT, and these "children" NFTs can also be parents to other NFTs as well.

IV. ERC-6220: Composable NFT

ERC-6220 is a non-fungible token standard that enables NFTs to add parts to themselves selectively, a process called "Equipping", which creates customizability for NFTs.

V. ERC-6381: Unicode Emojis

ERC-6381 standard enables owners of NFTs to interact with them using emojis. This interactivity can help bring about a display of the level of likability an NFT or NFT collection has among users.

NFT standards being proposed now are making developers and users alike rethink how NFTs can be used, as well as showing that NFTs can have real-world applications. With these standards, some of the following have become possible with NFTs;

•Co-Owned NFTs: Co-Owned NFTs are now possible with the introduction of concepts like Fractional NFTs. An NFT can now have multiple owners, with each person owning a part of it. This will play a significant role in virtual lands and real estates or pricey assets where many investors can pull funds together to finance the buying of such NFTs. Each owning a percentage of its value.

•Rental NFTs: Rental NFTs allow for NFTs to be rentable. Now wallets can rent NFTs for a period. This innovation creates an extra way of earning from NFTs for owners.

•Non-transferable NFTs: Non-transferable NFTs make for things like tokenized proof of personal achievements, examples of certificates, degrees, etc. to have better authenticity.

•Dynamic NFTs: Dynamic NFTs or dNFTs are non-fungible tokens that can evolve because their metadata is upgradable. Their metadata can be added to through smart contracts that relay information, maybe a trigger event, to it from on-chain or external sources like an oracle. For instance, you can have an NFT that changes its theme from light to dark based on the time of the day and much more.

Conclusion

NFT 2.0 evolution has brought about innovations in NFT use cases, aligning NFT technology to real-world applications. Bringing about a richer and more interesting experience for those navigating the ecosystem of Non-Fungible Tokens. Though these new token standards bring about innovations, they didn't come without creating a few challenges of their own, an example of which is the as-of-yet unavailability of more specialized marketplaces that would facilitate and process transactions like the renting of NFTs. But these challenges are also opportunities for builders and creators to get innovative and seek ways to bring about solutions to them in effect, making NFTs more useful and fostering wide adoption of the technology.