What is ERC-404? New trends and hype in the crypto market

Author: Shaurya Malwa Source: coindesk Translation: Shan Oppa, Golden Finance

< p style="text-align: left;">ERC-404 allows multiple wallets to directly own the same NFT, and in the future, it could support the tokenization of this specific exposure for loans or collateral interests.

• Pandora is the first framework to try to make tokens and NFTs work at the same time.

• ERC-404 is not an "official" token standard, but that didn't stop other developers from following Pandora's lead a week after launch success.

The first token based on the new, unofficial, experimental Ethereum standard is already on the crypto market A new multi-million sub-asset class was created.

Pandora {{PANDORA}}, the first so-called "ERC-404" token, was trading at less than $250 a week on Friday morning Lows rose to $32,000. It has a supply of just 8,000 tokens and a trading volume of around $76 million in the past 24 hours.

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Some projects have seized on the hype and issued their own versions of ERC-404 tokens.

Some of these companies airdrop a small portion of the token supply to Pandora holders, increasing demand for the token while also creating a Projects create hype. At the same time, some blockchains have launched on others, such as Arbitrum and Solana, in an effort to become first movers in completely different ecosystems.

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Well-known exchanges OKX and Binance announced support for ERC-404 tokens on their Web3 wallets, adding legitimacy to the standard and further fueling the hype.

What is ERC-404?

ERC-404 combines the popular ERC-20 and ERC-721 standards for issuing tokens and non-fungible tokens (NFTs) on Ethereum respectively. )), enabling developers to create collections of fragmented NFTs that can be freely traded and publicly used. market.

In its current form, NFT exists as a one-to-one asset. Unlike tokens, holders of tokens can purchase an entire Small portion.

While fragmented NFTs do exist, they typically rely on entities that lock those NFTs in wallets and issue tokens representing that NFT. These fragmented tokens are freely tradable and may not accurately match the locked NFT value.

This is one of the key issues that ERC-404 wants to solve. It allows multiple wallets to directly own an NFT and create a use case in the future where a specific risk can be tokenized and used to obtain loans or hold equity.

"People in crypto hate friction," ctrl, one of the developers of Pandora and ERC-404, told CoinDesk in a Telegram message.

"Every solution before ERC-404 had too much friction and was usually a packaging solution that abstracted away what people wanted to split or create liquids of the original NFT," he said. "Collectors hate this, and it greatly limits adoption. ERC-404 has these features by default and doesn't rely on confusing third-party protocols and solutions," he added.

ERC-404 developers said on their GitHub page that while the two standards it combines "were not designed to be mixed," the project "Strive to do this in the most robust way possible while minimizing trade-offs."

Developer 0xacme said on Github: "This standard is completely are experimental, unaudited, and tested to ensure implementation is as accurate as possible." "However, the nature of overlapping standards does mean that integration protocols will not be able to fully understand their mixed capabilities."

< h2 style="text-align: left;">EIP is about to officially take effect

However, ERC-404 is not an officially recognized Ethereum token standard; Is a set of rules and protocols that define how digital tokens should behave and interact within a specific blockchain ecosystem.

The team is actively developing an Ethereum Improvement Proposal (EIP) for the token standard. EIP is the process of introducing new features or functionality to Ethereum. The developers added that the EIP process can take a while and isn't completed quickly.

ctrl said: "We really need to make sure we do it right and address this issue with a foolproof proposal." "Given that we are A strange new thing spawned from a very informal side of the market."

If approved, the standard will become a An "official" standard endorsed by the blockchain non-profit organization) for use in the Ethereum ecosystem as an agreed-upon framework for compatibility with Ethereum-based applications.