An innovative and experimental Ethereum standard known as “ERC-404” is currently in the works to propose a combination of fungible and non-fungible tokens (NFTs). The creators, who go by the names “ctrl” and “Acme,” have developed this standard under the project called Pandora. ERC-404 merges the technology behind ERC-20 tokens, which are fungible, with ERC-721 tokens, which are used for unique NFTs like those found in the Bored Ape Yacht Club (BAYC) collection.
Despite its name, ERC-404 has not undergone an audit, and the inclusion of “ERC” in its name is merely symbolic. Ctrl, one of the developers behind ERC-404, explained that obtaining an approved Ethereum Improvement Proposal (EIP) is a complex bureaucratic process. Ctrl did not disclose the identities of the individuals working on the proposal but mentioned that they have a track record of success and are in a favorable position to submit the EIP soon.
The goal of ERC-404 is to link ERC-721 NFTs with ERC-20 tokens, enabling the creation of fractionalized NFTs. This means that multiple wallets can collectively own a portion of a single NFT, such as a BAYC NFT, and utilize that portion for trading or staking purposes.
The GitHub page for ERC-404 acknowledges that the standard is experimental and that the two standards it aims to combine were not originally intended to be mixed. Nonetheless, the project aims to fuse them together in the most robust manner possible while minimizing any trade-offs.
Despite some concerns surrounding the safety of ERC-404, particularly regarding the potential vulnerability of NFTs using this standard, the developer dismisses these worries. Ctrl argues that any vulnerabilities arise from improper usage of the contract and that a correctly configured protocol would prevent any unauthorized withdrawal of NFTs.
Leading cryptocurrency exchanges Binance and OKX have announced their support for ERC-404. Ctrl also addressed the concerns raised by a developer named “quit,” stating that if quit’s concerns were valid, there would have been an exploit already. He mentioned that Pandora is currently auditing a more refined version of the standard that addresses integration issues.
The launch of Pandora’s first ERC-404 token, called “Pandora,” on February 5th has seen significant gains, with a four-day increase of over 1,850% and a market cap of nearly $293 million, according to CoinGecko. CoinGecko also lists 12 other projects that have used ERC-404, including a frog-themed version of the DeGods NFT collection with a market capitalization of nearly $30 million and a collection of NFT pet rocks based on ERC-404.
In conclusion, the ERC-404 standard offers an innovative combination of fungible and non-fungible tokens, allowing for the creation of fractionalized NFTs. While some concerns have been raised regarding its safety, the developers are confident in their approach and have gained support from major cryptocurrency exchanges. The launch of the Pandora token has been met with significant success, and many other projects have embraced ERC-404 for their NFT collections.