Experimental standard ERC-404, first token soars 12,000% in one week | CoinDesk JAPAN

• Pandora is the first framework that aims to make tokens and NFTs work together.
• ERC-404 is not an “official” token standard, but within a week of its publication, other developers tried to follow Pandora's success.

The first tokens based on the new unofficial and experimental Ethereum standard have created millions of new sub-asset classes in the crypto market.

Pandora, a pioneer of so-called “ERC-404” tokens, rose from a low of $250 in less than a week to $32,000 (approximately 4.8 million yen, equivalent to 150 yen to the dollar) on the morning of the 9th. . Pandora has a supply of just 8,000 coins and has traded about $76 million in the past 24 hours.

Several projects have already capitalized on the boom and issued their own ERC-404 tokens.

Some of these tokens are airdropping small amounts of their supply to Pandora holders, increasing demand for the tokens and raising the profile of their own projects. Some have been issued on other blockchains, such as Arbitrum and Solana, trying to become pioneers in completely different ecosystems.

Major crypto asset (virtual currency) exchanges OKX and Binance announced that their Web3 wallets now support ERC-404 tokens. This also increased the legitimacy of this standard and increased its popularity.

What is ERC-404?

ERC-404 is a combination of ERC-20 and NFT ERC-721, which are popular as token issuance standards and NFT issuance standards on the Ethereum blockchain, respectively. This will allow developers to create fragmented NFT collections that can be freely traded and used on the public market.

In their current form, NFTs exist as one-to-one assets, unlike tokens, where owners can buy a portion of the whole.

Fragmented NFTs exist, but typically an entity locks them into a single wallet and issues tokens to represent them. Since fragmented tokens in this form are freely traded, they may not exactly match the value of the locked NFT.

This is one of the key problems that ERC-404 is trying to solve. This allows multiple wallets to directly own a single NFT, creating use cases in the future where certain exposures can be tokenized and used for loans or staking.

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

ctrl pointed out that “all solutions before ERC-404 had too much friction and were typically fragmentation or wrapping solutions that abstracted away the original NFT that you wanted to make fluid.” “Collectors hated this, and it severely limited adoption. ERC-404 has these features by default and does not rely on cryptic third-party protocols or solutions.”

ERC-404's developers say on their GitHub page that while the two standards ERC-404 combines are “not designed to be mixed,” the project is “doing as much as possible while minimizing trade-offs.” “We're trying to mix it in a robust way.”

Developer 0xacme says on Github that “the standard is completely experimental and unaudited, but testing is being conducted to ensure enforcement is as accurate as possible.” “However, the overlapping nature of the standards suggests that the integrating protocols do not fully understand their mixed functionality.”

EIP is required for official recruitment

However, ERC-404 is not an officially recognized Ethereum token standard.

The team is actively working on Ethereum Improvement Proposals (EIPs), the process of introducing new features to the Ethereum blockchain. The EIP process can take time and is not instantaneous, the developers explained.

ctrl said: “Given that we are a strange, nascent entity that has come out of the very informal side of the market, we want to make sure we get it right and approach this with a solid offer. There is a need.”

If approved, the standard will become an “official” standard recognized by the Ethereum Foundation, the non-profit organization that maintains the Ethereum blockchain, and will serve as an agreed-upon framework compatible with Ethereum-based applications. Become available for use within the ecosystem.

｜Translation and editing: Rinan Hayashi
｜Image: Ashin K Suresh/Unsplash, modified by CoinDesk
｜Original text: What Is ERC-404? The Experimental Standard Whose First Token Has Rocketed 12,000% in One Week