ERC-404, a new Ethereum standard, gains significant traction as its inaugural token experiences an astonishing surge of 12,000% within a few days.
ERC-404, a new Ethereum standard, aims to blend the functionalities of cryptocurrency and non-fungible tokens (NFTs). However, Ethereum observers are expressing concerns about gas optimization and rug pulls that have already occurred.
Pandora, the first asset under the experimental ERC-404 standard, experienced a significant surge in value, skyrocketing by 12,000% in less than a week due to the hype and speculation surrounding this new development. The token started trading at around $250 on February 3 and reached over $30,000 per token by February 9, according to data from Dextools. With a supply of 8,000 coins, Pandora attracted $80 million in trading volume within 24 hours.
The initial success of Pandora prompted Binance and OKX crypto exchanges to support ERC-404 assets on their web3 wallet services, further increasing attention towards this emerging standard. Other development teams, such as Monarch and DeFrogs, have also embraced the hype by creating tokens built with the ERC-404 standard and allocating a portion of the supply to Pandora holders.
ERC-404 is an innovative combination of ERC-20, the prevailing standard for cryptocurrencies on Ethereum, and the ERC-721 design used for NFTs. This decentralized architecture aims to merge features from both sectors, allowing developers to create fractionalized NFT collections that can be traded on open markets like Uniswap.
Although fractionalized NFTs already exist, they typically require creators to lock the underlying digital collectible and issue derivative tokens for each NFT. This approach often leads to a lack of liquidity and price discrepancies between the issued tokens and the NFT’s market value. The ERC-404 standard addresses these challenges by injecting additional liquidity into NFTs and enabling multiple users to own a single NFT.
While the ERC-404 standard is unofficial at present and not yet recognized by the Ethereum foundations, there are rumors of a proposal to address this and unlock additional utility, such as staking.
Overall, ERC-404’s integration of cryptocurrency and NFT functionalities has generated excitement and interest in the Ethereum community, but concerns about gas optimization and rug pulls remain. The potential of this new standard, however, could revolutionize the NFT market by providing greater liquidity and accessibility for users.
