What is ERC-404? ERC-404 Features

MetaversePlanet December 9, 2024Last Updated: December 9, 2024

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ERC is an acronym for Ethereum Request for Comment and refers to the token standards on theThe Ethereum (ETH) network is home to numerous token standards that guide how crypto assets are created and managed. Among these, the ERC-20 standard has been the foundation for many altcoins in the cryptocurrency market. However, a new token standard, ERC-404, has recently gained attention due to its unique features and innovative design.

In this article, we will explore:

What is ERC-404?
What are the ERC-404 features?
What are ERC-404 tokens?
Is ERC-404 worth investing in?

Contents show

What Is ERC-404?

ERC-404 is an experimental and innovative Ethereum NFT standard that merges characteristics of NFTs (ERC-721), which are non-fungible tokens, and fungible tokens (ERC-20). This unique combination allows a token to be both fungible and non-fungible depending on its use case.

At the time of writing, ERC-404 is not officially listed as an Ethereum Improvement Proposal (EIP) and has yet to be approved by the Ethereum community. Its potential, however, has sparked significant interest in the cryptocurrency world.

What Are the ERC-404 Features?

The ERC-404 standard introduces a concept called semi-fungible tokens, blending the benefits of both ERC-20 and ERC-721 token standards. This unique design opens up new possibilities for developers and users by enhancing Ethereum’s functionality.

Key Features of ERC-404 Tokens:

1. Improved Interoperability

ERC-404 tokens can interact seamlessly with protocols in both the fungible token and NFT spaces, bridging these previously separate ecosystems. For instance, ERC-404 tokens can be used as collateral in DeFi protocols while also being traded on NFT marketplaces.

2. Flexibility

The ability to switch between fungible and non-fungible forms creates exciting opportunities for dynamic and interactive NFTs. Token developers can design tokens that change status and value based on specific events or actions.

3. Low Transaction Costs

ERC-404 tokens support mass transfers, allowing users to send multiple tokens to multiple addresses in a single transaction. This reduces transfer costs and enhances transaction security by verifying token ownership before executing transfers.

4. Increased Liquidity

Since ERC-404 tokens can be traded as fungible tokens on decentralized exchanges (DEXs), they offer improved liquidity compared to standard NFTs. This solves the common issue of low trading volume and high price volatility faced by conventional NFTs.

What Is the PANDORA Token?

Pandora (PANDORA) is recognized as the first ERC-404 token and remains the most popular one today. Each PANDORA token holder receives a corresponding NFT collection copy for every token they own. Its detailed features and development roadmap can be explored further through its whitepaper.

Is ERC-404 Worth Investing In?

Since February 2024, ERC-404 has become one of the hottest topics in the cryptocurrency world. Naturally, many investors are asking, “Is it worth investing in ERC-404 tokens?”

At this stage, it is too early to provide a definite answer. The ERC-404 standard holds potential for expanding Ethereum’s ecosystem and unlocking new DeFi opportunities. However, its experimental nature comes with uncertainties and potential technical challenges. Investors should approach it cautiously and stay informed about its development progress.