Coinranking
| # | Coins | Price | 24h | ||
|---|---|---|---|---|---|
| | |||||
| | 1 |  | $ | -2.08%  | |
| | 2 |  | $ | +0.64%  | |
| | 3 |  | $ | -0.28%  | |
| | 4 |  | $ | -1.09%  | |
| | 5 |  | $ | -2.44%  | |
| | 6 |  | $ | +0.14%  | |
| | 7 |  | $ | -1.33%  | |
| | 8 |  | $ | --%  | |
Top gainers
| Coins | Price | 24h | |||
|---|---|---|---|---|---|
| | | $ | -2.08% | ||
| | | $ | +0.64% | ||
| | | $ | +0.14% | ||
| | | $ | -0.28% | ||
| | | $ | -1.33% | ||
| All gainers | |||||
What are ERC-404 tokens?
Token standards play a crucial role in the blockchain world, offering guidelines for digital assets like Ethereum tokens. The groundbreaking ERC-404 token standard, developed by anonymous creators "ctrl" and "Acme," merges features from established standards like ERC-20 and ERC-721, forming what's known as a "semi-fungible" digital asset.
How does ERC-404 work?
ERC-404 takes a unique approach by combining elements of fungible and non-fungible tokens to allow different methods of tokenization on Ethereum. NFTs are generally sold as a whole and not as small fragments as they are not meant to be divided. ERC-404 bypasses this by using token mint and burn methods to allow NFTs to be transferred in fragments.
Essentially, if tokens are linked to an NFT. If you buy a token, the NFT would be minted to your wallet. If you sell a fraction of the token, the NFT is burned. If you have several fractions to complete a token, a new NFT would be minted.
Why is ERC-404 Unique?
This technology allows a certain level of experimentation with NFTs and transfers of it. The goal with ERC-404 is to allow native fractionalization.
The creators of Pandora, an initiative utilizing ERC-404, assert that it empowers NFTs created with this standard to maintain a token price mirroring real-time floor prices. This is made possible by the inherent liquidity facilitated by ERC-404. Unlike traditional setups requiring a single buyer, holders of ERC-404 tokens can sell when they choose, given the presence of a liquidity pool.
Moreover, rather than necessitating the locking or wrapping of NFTs with the issuance of shares against them, the process of fractionalizing NFTs can occur organically, devoid of dependence on external protocols or solutions.
Additionally, the Pandora team has proposed another potential application: gaming NFTs featuring randomized elements in the destruction and reissuing of NFTs.
Examples of ERC-404 projects
Pandora: Among the pioneering initiatives to embrace the ERC-404 token standard is Pandora. This project features 10,000 PANDORA ERC-20 tokens along with an equivalent number of associated "Replicant" NFTs. Whenever a PANDORA token is acquired on an exchange, a corresponding Replicant NFT is generated and added to the buyer's wallet.
DeFrogs: DeFrogs represents a collection of 10,000 NFTs themed around Pepe the Frog, utilizing a version of the ERC-404 token standard. Marketed as the inaugural ERC-404 PFP collection, the creators highlight its deflationary nature.
Monkees: Another venture adopting the ERC-404 token standard is Monkees, a collection comprising 100 NFTs characterized by ten distinct attributes and six traits.
Final thoughts on ERC- 404
Unlike the well-established ERC-20 and ERC-721 token standards, ERC-404 is labeled as "experimental" and unofficial. This means it hasn't undergone the review process as an Ethereum Improvement Proposal (EIP) or undergone an external audit. Consequently, there's a possibility of undiscovered flaws, posing a significant risk to token holders.
The development team emphasizes that while ERC-20 and ERC-721 aren't intended to be combined, their implementation aims to achieve this in a robust manner while minimizing drawbacks, albeit being acknowledged as a "non-standard" implementation of ERC-721.
Due to its unofficial status, many NFT platforms and marketplaces do not offer default support for ERC-404.
The team intends to submit ERC- 404 as an official Ethereum Improvement Proposal, although this process may take time. However, their choice to bypass the standard approval process could set a precedent for other projects, potentially leading to more unaudited token standards entering the market, posing risks to users.