I tried using Contact 7 Forms include_blank but it did not work.
this works only for CF7 field tags, the dynamic dropdown is a field tag that is part of the Smart Grid plugin.
The plugin was written with the aim to bring the CF7 plugin back into the WP core framework, ie use the WP way of doing things. It is more efficient and allows other plugins to extend functionality. Therefore to customise the functionality of the plugin (as the default select option in this case), the plugin uses hooks & filters.
When you create a new dynamic_dropdown field in your Grid UI, you will notice an extra set of filters available as an icon in the column controls of the field (see screenshot #17), I also talk about these field specific filters in this video tutorial. The 4th filter in the list allows you to set the label for the default option (make it blank is you want.), simply click the filter link which will copy a helper code that you can paste in your functions.php file.