Is “DN-404” the next Ethereum token standard “ERC-404”?

Improving the liquidity of NFTs

A group of crypto asset (virtual currency) developers launched a new token standard “DN-404'' on the 12th.

The ultimate purpose of developing DN-404 is to create a token standard for NFTs (non-fungible tokens) that has a splitting function from the beginning. The aim is to allow investors to trade divided NFTs without the need for an intermediary.

connection: Twitter post worth 300 million yen | Mechanism and potential of “NFT” that is attracting attention from large companies

A member of the X account called “cygaar” is involved in the development of this standard, and cygaar explains DN-404 on X. DN-404 replaces the ERC-404 token standard that was launched earlier this month, and DN stands for “Divisible NFT.” The word “divisible” means “able to be divided.”

As cygaar also emphasizes, the effort to develop DN-404 is not an official project. The company says it has only released open source code for other projects to use and has no plans to sell the tokens, warning people to be wary of scams. He also explained that he has not had a formal audit of the code.

Excited to launch the “Divisible NFT” standard (DN404) which aims to be a hybrid ERC20/721 token.

ERC404 took the crypto world by storm over the past few days, but it doesn't follow existing standards, is inefficient, and breaks at certain edge cases.

Here's how DN404 works : pic.twitter.com/3kj504Gb97

— cygaar (@0xCygaar) February 12, 2024

What is DN-404?

ERC-404, which was launched earlier, is a standard that combines the general virtual currency standard “ERC-20'' and the NFT standard “ERC-721.'' The aim is to increase liquidity by making NFTs divisible.

Note that “ERC” stands for the Ethereum (ETH) blockchain standard, but ERC-404 has not yet gone through the process of being officially approved as a standard. On the other hand, tokens based on standards are being issued.

According to data from decentralized exchange (DEX) Uniswap, the price of “Pandora”, which was first issued with ERC-404, was in the $607 range (about 90,000 yen) on the 2nd day after its launch, but on the 9th. The price soared to the $32,000 (approximately 4.81 million yen) range. The Pandora transaction is believed to have affected Ethereum fees.

cygaar pointed out the issue with ERC-404, saying, “It is based on the premise of creating one contract that functions as both a virtual currency and an NFT.'' This, he argued, poses problems such as not being able to comply with existing standards and risking abuse.

Mr. cygaar explained that in response to this problem, DN-404 created two contracts and created a system to express divided NFTs based on ERC-20. Then, if certain conditions are met, an official NFT will be issued, and if the conditions are no longer met, the NFT will be burned.

“quit.q00t.eth” is involved in the development of DN-404.X accountAccording to DN-404, fees can be lowered by an average of 20% compared to ERC-404.

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