NFT and Smart Contract: Shaping the Future of Digital Evolution
In 2024, the NFT market continued to expand, setting a record $4.1 billion in global transaction volume in the first quarter, reflecting significant initial enthusiasm. However, as the early hype began to subside, the second quarter’s transaction activity decreased to $2.25 billion, still maintaining considerable demand. Despite fluctuations, the NFT market overall showed signs of sustained growth and resilience.
Despite these impressive numbers, many NFTs are still just simple images whose value can be subjective. While some question their artistic merit, others find personal or cultural significance in them. These NFTs, often called ‘artworks,’ may not be universally recognized as art, but they hold value for many collectors. Most purchases are driven by hype and fear of missing out (FOMO) rather than genuine appreciation for the art. Additionally, the main technology behind blockchain — smart contracts — has not been fully utilized in most NFT projects.
The Power of Smart Contracts and NFTs
Although many current NFT projects lack depth, some past projects have used smart contracts to make NFTs more interactive and meaningful.
1. Async.art: A New Way to Create Interactive Art
Async.art is an NFT platform that allows artists to create programmable and changing artworks. Collectors can participate in changing the art through smart contracts, such as altering colors, swapping visual elements, or even changing the composition of the artwork itself, making it more interactive and engaging.
One well-known example is “The First Supper,” which was created by 13 different artists. It has a main piece called the “Master,” composed of multiple Layers. The Master stores a file on IPFS that records what the Layers look like and where they are positioned. Each Layer has options that collectors can change, which in turn changes the overall artwork. This makes the NFT dynamic and interactive, allowing collectors to become part of the creative process rather than just passive owners. This dynamic interaction transforms collectors into co-creators, enhancing engagement and personal connection to the art.
For example, the background of “The First Supper” can be switched between four different options: Classic, Light Oscillations, Dark Oscillations, and Electro Tiles.
Different backgrounds are used at different times, which alters the appearance of the artwork. In August 2024, it had the Classic background, while in March 2021, it used the Electro Tiles background.
Details also change, such as replacing a three-eyed cat icon with a white hand icon or turning a blue cassette into black and white. These changes are made by collectors who own the Layers, allowing them to directly influence the entire artwork. This makes them co-creators rather than mere collectors.
Another interactive piece on Async.art is called “Carbon Study”, which is made up of five Layers that form one Master. From the creator’s perspective, ‘Carbon Study’ represents an exploration into the evolving relationship between art and technology. By utilizing algorithms and computational processes, ‘Carbon Study’ allows each artwork to dynamically change, highlighting the intersection of generative art and blockchain technology. This approach pushes the boundaries of contemporary art practices, transforming how both artists and collectors experience digital art.
Each Layer NFT has two properties: whether it is displayed and its rotation angle. If you change the rotation of Layer 2 by 90 degrees to the right, the entire Master artwork changes as well. This means that a small change in one Layer can significantly impact the entire artwork. By using smart contracts, these NFT elements become dynamic, making them more engaging compared to traditional digital art.
Although Async.art closed its platform in October 2023, the NFTs created there still exist and can still be viewed and modified. Async.art introduced a new way of thinking about digital art, giving it an unprecedented level of interactivity. From the artist’s perspective, programmable art offers a transformative experience, pushing beyond static visuals to create something that evolves with time and interaction. This kind of art not only changes how artists express themselves but also deepens the engagement between collectors and the artwork, fostering a collaborative creation process that extends far beyond traditional digital art.
2. Nouns DAO: The Organization Behind Pixel Characters
Nouns is an NFT project on Ethereum where each Noun is a 32x32 pixel character. A new Noun is created every day through a public auction, with all proceeds going to the Nouns DAO treasury. While Nouns may look like simple pixel art, they are backed by a powerful decentralized autonomous organization (DAO), powered by smart contracts.
Nouns DAO holds substantial Ethereum assets to support community projects. Owning a Nouns NFT makes you part of the Nouns DAO, granting you voting rights on proposals regarding DAO funds, community events, and more. Each Noun NFT represents one vote, regardless of its auction price.
To submit a proposal in Nouns DAO, you need the support of at least two Noun holders. Once supported, the proposal goes through a review and voting process before it is approved and executed on the Ethereum blockchain.
Nouns DAO also has a “Rage Quit” mechanism, which allows holders to leave the project if they are unhappy. If at least 20% of holders decide they want out, they can start a process called a ‘Fork’ to take their share of the treasury funds and leave the community.
In September 2023, over 40% of Noun holders were dissatisfied and used the Fork option, withdrawing 11,858 ETH from the treasury.
These systems, managed by smart contracts, help Nouns DAO maintain its strength and value over time. Smart contracts balance assets and interests, contributing to the continuous growth of the community.
As of September 2024, Nouns DAO had created over 600 proposals, including:
- Proposal 583: “Nouns Town LA, 2024,” a community event. Cost: $290,000
- Proposal 68: Support for Nouns Esports to promote the brand. Cost: 35 ETH
- Proposal 23: Nouns Prop House to fund small creative projects. Cost: 15 ETH
Through these proposals, Nouns DAO demonstrates how smart contracts can help manage community funds and make decisions fairly.
3. Pak’s NFT Experiments: A Game for Everyone
Pak is a well-known digital artist who uses smart contracts to create unique NFT projects. Some of his most famous projects include Burn.art, Merge, and The Creation.
- Burn.art
Burn.art is a platform where users can burn their NFTs and earn tokens called “ASH” in return. The idea is “creation through destruction.” By burning an NFT, you receive ASH, which can be used to buy new art or make more transactions, creating a cycle of ‘burning — earning ASH — burning again.’ The platform is not just a marketplace for NFT transactions but also an experimental digital art project that explores how the liquidity and scarcity of virtual assets can be enhanced through users’ proactive behavior. This turns the process of burning NFTs into something interactive.
ASH tokens have different levels of burning. For Pak’s NFTs, burning starts at 1,000 ASH, while for others, it starts at 2 ASH. The amount of ASH received is determined through a bonding curve mechanism, which also ensures the scarcity of Pak’s NFTs.
- The Merge
Merge is a groundbreaking NFT artwork released by Pak on the Nifty Gateway platform in December 2021. The design concept of Merge is very unique, described as an artwork of ‘distributed mass,’ aiming to challenge the value of ‘scarcity’ in traditional NFT concepts. What makes Merge NFT special is that it is not a fixed, single image but can grow by purchasing more ‘mass’ to merge and form a larger NFT. During the release, users could purchase a unit called ‘mass,’ with each unit representing a part of the Merge NFT. Since a wallet can only hold one Merge NFT, when a wallet purchases additional mass, these units merge into a larger unit, thus increasing the ‘mass.’ Ultimately, the holder’s Merge NFT displays the total mass they own, forming a dynamically growing artwork. This design makes Merge NFT not only visually unique but also logically innovative. Pak’s The Merge, with its innovative bonding curve pricing mechanism and mass design, provides a new model for purchasing and owning NFTs. This mechanism not only incentivizes early participants but also ensures the project’s sustainable development and dynamic balance of market value.
- The Creation
The Creation is a digital reimagining of Michelangelo’s “The Creation of Adam.” The entire painting was divided into 35x16 individual digital tiles. During the first 72 hours of the project (starting February 10, 2021), all tiles were available for bidding. Once each tile was successfully bid on, a 24-hour auction for that tile was initiated. Based on the Triangle Number Progression, after every 20 tiles were auctioned, the minimum bid amount for all tiles increased incrementally. Only the tiles that were successfully bid on became part of the final artwork.
Out of all the tiles, 181 were sold to 69 people, forming the final piece.
Pak’s innovative projects, such as Burn, Merge, The Creation, censored.art, and The Fungible Collection, exemplify the transformative potential of NFTs by leveraging smart contracts to create interactive, dynamic, and game-like experiences. These works go beyond static digital assets, incorporating elements like merging units, altering visual states, and evolving over time to make each piece uniquely engaging. Designed to feel like multiplayer games, Pak’s projects invite collectors to actively participate in challenges, compete for rare elements, and collaborate in shaping the evolution of the artwork. This gamified approach fosters a sense of community, turning art ownership into an exciting and shared journey while exploring the economic and artistic possibilities of NFTs. By tightly integrating user behavior into the creative process, Pak redefines the boundaries of digital art, making it an interactive and immersive experience.
The Future of NFTs: Smart Contracts as the Key
The current NFT market, particularly in profile picture (PFP) projects, is heavily driven by hype but faces significant challenges, primarily due to a lack of interactivity and meaningful functionality. As the initial excitement fades, the value of many PFP projects tends to decline, revealing their limited long-term appeal. The true potential of NFTs lies in leveraging smart contracts, which transform them from static digital images into dynamic, interactive assets. By harnessing the capabilities of smart contracts, NFTs can unlock innovative functionalities and redefine their role in the digital economy, paving the way for a more sustainable and engaging future for the space.
- Interactive Art: NFTs show great potential in the field of interactive art. Through smart contracts, artworks can interact with viewers and change in real time. The success of Async.art demonstrates how multi-layered artworks can integrate user inputs and data changes, making each piece unique and continuously evolving. This interactivity not only enhances the appeal of the artwork but also introduces gamification through contracts, increasing user engagement and offering a unique ownership experience.
- DAO Management: NFTs can also be used as membership tickets to join DAOs. This allows holders to vote on project decisions, making them feel more involved in the community. It increases transparency and ensures everyone has a say.
- On-Chain Gaming: Games could be an excellent use for NFTs and smart contracts. In these games, NFTs won’t just be collectibles but will also be part of the gameplay, like evolving characters or special items that players can interact with. This makes on-chain games more exciting and opens up endless possibilities.
References:
- danky.art, First Supper — Async Art Launch.
- nftnow.com, 10 Async Art Projects That Made Crypto Art History
- MattKane, Why Async Art? An Artist’s Perspective
- arjitkapoor, Carbon Study: An essay on generative art exploration
- nftnow.com, An NFT Every Day: A Guide to the Nouns NFT Project, DAO, and Ecosystem
- coincodex.com, The Merge NFT: Ethereum Collection That Raised $90,000,000+
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