Research & Reviews

Introducing ERC-404s: The New Hybrid Token

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Content Guide

ERC-404 is a new token standard in the crypto world. It’s a hybrid of ERC-20 and ERC-721 token running on the Ethereum network. This means this type of token can act like a fungible (like ETH or BTC) and a non-fungible token too. Also have the capability to share the ownership of one NFT for more owners.

What Is An ERC-404 Token? – The New ERC On The Ethereum Network

The ERC-404 token is an experimental token standard on the Ethereum blockchain network that aims to bridge the functionalities of ERC-20 (fungible tokens) and ERC-721 (non-fungible tokens, or NFTs) into a single standard. This means that ERC-404 tokens can be both fungible and non-fungible, depending on the specific implementation.

It is developed to enable unique functionalities, such as allowing multiple wallets to directly own a single NFT and creating use cases where specific exposures can be tokenized for applications like taking out loans or staking holdings. Additionally, the ERC-404 standard is designed to enhance liquidity and enable the fractionalization of NFTs, opening up new possibilities for the token economy.

What Is Pandora? From EIP To A $20,000 Project

In the early days of February, a beginner developer came up with a new type of token named EMERALD. This first token was an early version of what would become ERC-404, but it encountered a significant problem due to a bug and didn’t succeed. Despite this setback, some developers recognized the innovative idea behind EMERALD and refined it, creating the ERC-404 standard at the start of February 2024.

The launch of the first ERC-404 token, known as $PANDORA, marked a significant milestone. $PANDORA introduced a unique combination of NFT boxes in various colors alongside the PANDORA token itself. Since its introduction to the market, PANDORA’s value has skyrocketed to over a 100 million dollar market capitalization. Following PANDORA’s success, new projects have started to emerge that utilize this technology, such as Defrogs, showing the growing interest and potential of the ERC-404 standard.

How Do ERC-404s Work?

ERC-404s mix the best of both worlds from the Ethereum blockchain, blending the elements of replaceable tokens and one-of-a-kind tokens into a neat package. Each ERC-404 contract simultaneously brings into existence a unique token (NFT) and a standard token in a fixed proportion. For instance, with PANDORA, there are 10,000 NFTs matched with an equal number of PANDORA tokens.

what is erc-404 token

What sets these tokens apart is how closely the NFTs and tokens are connected. In the case of PANDORA, owning 1 PANDORA token is the same as owning 1 Pandora NFT. Getting an NFT means you also get a PANDORA token right away. Selling the token leads to the deletion of the NFT you have, and a new NFT is created for the buyer. If you pass on the NFT, you also give up the token, which then goes to the new owner.

Thanks to the replaceable tokens part of ERC-404s, it’s easier for projects to set up pools of funds to make trading NFTs smoother and boost the project’s financial health. Trading NFTs can be tricky because it’s usually done through auctions, which can lead to money flow problems. ERC-404s tackle this issue by pairing each NFT with a token that can be easily traded.

However, use these tokens with care since they’re still being tested and haven’t gone through a formal review process. As a fresh token, they haven’t yet been officially recognized through the Ethereum Improvement Proposal (EIP) system.


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