The role of a new form of dynamic interaction is explored in a network of generic identical oscillators. The proposed design of dynamic coupling facilitates the onset of a plethora of asymptotic states including synchronous states, amplitude death states, oscillation death states, a mixed state (complete synchronized cluster and small amplitude desynchronized domain), and bistable states (coexistence of two attractors). The dynamical transitions from the oscillatory to death state are characterized using an average temporal interaction approximation, which agrees with the numerical results in temporal interaction. A first order phase transition behavior may change into a second order transition in spatial dynamic interaction solely depending on the choice of initial conditions in the bistable regime. However, this possible abrupt first order like transition is completely non-existent in the case of temporal dynamic interaction. Besides the study on periodic Stuart-Landau systems, we present results for paradigmatic chaotic model of Rössler oscillators and Mac-arthur ecological model.Population biology of ecological networks, person to person communication networks, brain functional networks, possibility of outbreaks and spreading of disease through human contact networks, to name but a few examples which attest to the importance of researches based on temporal interaction approach. Studies based on representating several complex systems as time-varying networks of dynamical units have been shown to be extremely beneficial in understanding real life processes. Surprisingly, in all the previous studies on time-varying interaction, death state receives little attention in a network of coupled oscillators. In addition, only a few studies on dynamic interaction have considered the proximity of the individual systems' trajectories in the context of their interaction. In this paper, we propose a simple yet effective dynamic interaction scheme among nonlinear oscillators, which is capable of relaxing the collective oscillatory dynamics towards the dynamical equilibrium under appropriate choices of parameters. The dynamics of coupled oscillators can show fascinating complex behaviors including various dynamical phenomena. A qualitative explanation of the numerical observation is validated through linear stability analysis and interestingly, a linear stability analysis is persued even when the system is time-dependent. An elaborate study is contemplated to reveal the influences of our proposed dynamic interaction in terms of all the network parameters.