In the Ethereum ecosystem, we have fungible ERC-20 tokens for digital cash use cases and non-fungible ERC-721 tokens for digital collectibles use cases.
But what if you could blend the two perfectly?
This convergence is exactly what ERC-404, a new experimental token standard, was created for. In today’s article, let’s take you through the basics of the ERC-404 standard and Pandora, the first project built with the specification!
What is ERC-404?
Developed by the Pandora team, ERC-404 is a new unaudited token standard that aims to bridge the gap between fungible tokens and NFTs.
How it works: ERC-404 creatively blends elements from the ERC-20 and ERC-721 standards that were not traditionally designed to interact. Its ERC-721 approach deviates from the norm and relies on token minting and burning for partial transfers.
“This aspect of the conceptual design is well thought out to create an NFT with native segmentation, liquidity, and encouraging certain transactional/engagement aspects to nurture a unique set of traits,” the standard’s GitHub page reads. ”
Why it matters: We’ve seen NFT sharding protocols where you can lock up an NFT and effectively issue tokens against it. In contrast, ERC-404 aims to achieve native sharding in NFT projects that implement the standard. This opens up new avenues for NFT experimentation and trading.
Pandora 101
The Basics: Pandora is the first project to be built on the ERC-404 standard, offering 10,000 ERC-20 tokens and 10,000 associated “copy” NFTs. If you purchase 1 full PANDORA token on an exchange, 1 Replicant NFT will be minted to your wallet. If you sell 1 PANDORA token, its connected NFT will be burned.
How rarity works: Every time a Replicant NFT is minted into your wallet, it will appear in a unique rarity. The most common is green, while the rarest is red.
Therefore, it is possible to “recast” the rarity of the replica you receive by trading PANDORA tokens. Since the name of the series is Pandora, and the replicas are currently presented in the form of boxes, it is safe to say that they will “open” later to reveal something.
Supported platforms: Because ERC-404 is experimental, many platforms do not automatically support the standard. However, PANDORA is already trading on decentralized exchanges like Uniswap and NFT marketplaces like Blur and OpenSea.
Price Surge: In less than a week since their launch, the value of PANDORA and Replicants has skyrocketed as excited traders jump on board. During this time, the price of PANDORA has increased by 440% and is currently around $8,385 (about 3.52 ETH), while the lowest price of Replicants is currently around 3.7 ETH on Blur.
Is it a fad or a long-term solution?
Overall: Pandora is an interesting experimental implementation of the ERC-404 standard. Its code isn’t as efficient as it might, but it innovates in the segmentation of NFT smart contracts, a groundbreaking move that will pave the way for more future experiments.
It’s worth noting: in the future, more ERC-404-based collectibles can be expected, and more platforms can be expected to integrate this technology. On the latter side, we’ve seen a number of smaller projects such as Wasabi Protocol and Peapods Finance have recently adopted this technology.
Please note: ERC-404 is currently unaudited, which means it may have vulnerabilities that have not yet been discovered. In other words, don’t invest more money in the ERC-404 project than you can afford to lose in the early stages of experimentation. Plus, when you sell PANDORA tokens, the last Replicant you receive will be burned – making sure you don’t mistakenly burn what you want to keep!