aNFT (Autonomous NFT)

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What is aNFT (Autonomous NFT)?

Autonomous NFTs or aNFTs are non-fungible tokens (NFTs) that can interact with network participants and decentralized applications (dApps) without human interaction. aNFTs can be programmed to self-execute actions when certain predetermined conditions are met.

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They allow a wide array of autonomous interactions that developers and users can use across decentralized finance (DeFi) applications and blockchain gaming.

How Do aNFTs Work?

Autonomous NFTs are powered by smart contracts. Users can code smart contracts to perform specific functions when certain on-chain or off-chain conditions are met.

This autonomy is useful in several scenarios, such as crypto trading, where users can depend on the aNFT to perform certain actions when needed, in their absence.

What are the Uses of aNFT?

Here are various ways that aNFT can be used:

  1. Trading: aNFTs can be programmed to transfer themselves to wallets and applications. For example, you can program an aNFT to sell itself if its market price falls below a certain level.
  2. Collateral: aNFTs can be used as collaterals for loans on DeFi platforms. Users can program aNFTs to repay the loan when certain conditions are met in order to avoid sudden loan liquidations.
  3. Dynamic Wearables: Blockchain game developers and artists can create wearable autonomous NFTs for digital avatars that have the ability to change their shape, color, and design based on external conditions such as real-time data and in-game state.
  4. Non-playable Characters (NPC): aNFTs have the potential to enhance blockchain gaming experience by taking the role of NPC in games. aNFT-powered NPCs will be able to offer a more interactive experience to gamers by allowing dynamic storylines, varying difficulty levels, and individualistic experiences.
  5. Autonomous Real-World Asset NFTs: An example of a real-world asset aNFT would be tokens that pay the holders with automatic payments when certain real-world conditions are met. It could be an aNFT that represents a share in a holiday resort that pays shareholders a part of its profits every quarter.
  6. Voting: aNFTs can be used to represent voting rights in a company or a decentralized autonomous organization (DAO). This use of aNFT has the potential to solve a key problem in the crypto industry where voting rights holders have withheld from voting due to its being a tedious process. With aNFTs, voting rights holders can program a smart contract to vote for a certain agenda or party beforehand.
  7. Royalty Payments: Game developers and digital art creators can program NFT smart contracts to automatically pay themselves royalty payments when certain predefined conditions (Eg. NFT sale) are met. Automatic NFT royalty payments have been practiced for several years and have become the norm.

Pros and Cons of aNFTs

Advantages of using aNFTs:

Advantages Description
Automation Autonomous NFTs carry out actions without the need for human interaction. Such features are handy during time-sensitive operations such as crypto and NFT trading when a substantial profit or loss can be made based on a split-second decision.
Stop Loss and Limit Order Users can code aNFT to behave in a similar way to using stop loss and limit orders when trading. These features can be used to protect against loan liquidations and market losses.
Wide Use Cases aNFTs can be used across various crypto and blockchain functions, including trading, blockchain gaming, lending and borrowing, and real-world asset tokens.
Interactive Gameplay The use of aNFTs in blockchain gaming allows static NPC to become more interactive and customized, resulting in a better gaming experience.
Dynamic Visuals Programming aNFTs to change appearance when certain off-chain and on-chain conditions are met allows NFT artists to create engaging experiences for NFT enthusiasts.

Disadvantages of using aNFTs:

Disadvantages Description
Complexity Non-technical users may find it difficult to program aNFTs to perform specific functions or to meet certain conditions.
Back-End Requirements Creating aNFT may require custom back-end applications that may not be available to everyone.
Reliance on Oracles aNFTs self-execute actions based on the data that they are fed. Therefore, an aNFT becomes vulnerable to hacks if corrupt data is fed to it via compromised oracles.

Example of aNFT Use

Adam is a digital art creator who has several profile picture (PFP) NFT collections to his name. He wants to create a groundbreaking PFP aNFT collection called “Times of Crypto,” where the characters change their attire and accessories based on the price of Ether (ETH).

Adam programs the characters of his aNFT collection to automatically change into expensive suits and don gold and diamond jewelry when the market price of ETH is above $4,500. When the price of ETH drops below $2,000, the characters of his PFP collection return to their basic attire.

Note that the above-mentioned example is just an imagination of what could be done with aNFT technology.

The Bottom Line

Autonomous NFT is a promising technology that has the potential to impact several market verticals within the blockchain industry. We will certainly see innovative use cases of aNFT in the near future.

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Mensholong Lepcha
Crypto Specialist
Mensholong Lepcha
Crypto Specialist

Mensholong is a experienced crypto and blockchain journalist, now a full-time writer at Techopedia. He has contributed with news coverage and in-depth market analysis to Capital.com, StockTwits, XBO, and other publications. He began his writing career at Reuters in 2017, covering global equity markets. In his spare time, Mensholong enjoys watching soccer, finding new music, and buying BTC and ETH for his crypto portfolio.