Dynamic tokens are cryptocurrencies that can change their characteristics based on real-time data or predefined algorithms. Unlike static tokens, which have fixed properties, dynamic tokens can adapt their supply, value, or functionality in response to market conditions, user behavior, or other external factors.One common implementation is in decentralized finance (DeFi), where a dynamic token may adjust its supply to stabilize its value or to encourage user participation. For example, if a token is designed to incentivize liquidity, it might increase rewards when fewer participants are active.These tokens often use smart contracts to automatically execute changes. This allows for more flexible financial strategies, enabling projects to respond to market volatility, supply and demand, or governance decisions.By incorporating dynamic elements, these tokens aim to enhance utility, improve user engagement, and foster ecosystems that can adapt to changing conditions.