ERC-404 token standard
The ERC-404 standard is a novel idea in the Ethereum world, aiming to bridge the gap between unique digital assets (NFTs) and tradable cryptocurrencies designed by combining the features of fungible (ERC-20) and non-fungible (ERC-721) in an amalgamated form.
It allows for the fractional ownership of NFTs, essentially dividing them into tradable pieces, similar to shares in a company. This could revolutionize the NFT space by making high-value assets more accessible and opening doors for new applications like NFT lending and investing.
Top ERC-404 Token Standard Coins
At $24,672, Pandora (PANDORA) is the highest-valued ERC-404 token by market capitalization, followed by Anon. Etherrock404, a newcomer with a $1,662 market value, is also being observed. Cosmic (COSMIC), priced at $943.89, and DeFrogs (DEFROGS), priced at $2,101.85.
How ERC-404 token standard Works?
The fundamental mechanism of ERC 404 is mint-and-burn, which makes it easier for non-fungible tokens (NFTs) to be transferred and owned in fractions. This method makes it possible to split up NFTs into more digestible chunks, which increases the market liquidity of these valued digital assets and democratises access to them. For example, shared ownership can be enabled by holding a portion of an ERC 404 token associated with an NFT; if enough fractions are accumulated, a new, full NFT can be minted and stored in the holder's wallet.
Key features of ERC 404 token standard
Here is a thorough examination of the ERC-404 standard's features:
Ownership in fractions: ERC-404 allows numerous people to jointly own an NFT (ERC-721) through fractions. An NFT is not something you may purchase and sell as a whole.
Enhancement of liquidity: Fractionalization makes NFTs easier to find and tradable by increasing liquidity and opening them up to a larger market.
Dynamic trading: By allowing users to exchange NFT fractions as easily as fungible tokens, a more lively and interesting market is created.
Platforms Where ERC-404 Token Standard Used
1. DeFrogs is a set of 10,000 NFTs with Pepe the Frog in them. They are regarded as the ERC-404 token's initial PFP (Profile Picture) collection.
2. A little percentage of some new collections' tokens have been airdropped to Pandora holders. With this token standard, new collections have also emerged on Solana and Arbitrum.
3. Prominent exchanges like Binance and OKX have also extended assistance. This new token standard is compatible with their Web3 wallets.
ERC-404 Token Standard: Potentials and Challenges
The blockchain's asset ownership and trading processes could be completely changed by the implementation of ERC-404.
First off, one of the main disadvantages of the current NFT market is the requirement for an immediate buyer to sell an NFT. Since ERC-404 tokens are fungible, they can be traded to a liquidity pool whenever one becomes available.
Second, fractionating the NFTs through ERC-404 enables shared ownership of assets. This solves the problem of insufficient liquidity by enabling you to buy and sell portions of the NFTs, giving you access to expensive digital assets.
ERC-404 hasn't gone through the same scrutiny procedures as Ethereum token standards, though, because it's an experimental and unaudited standard. Due to the standard's lack of official review, investors and users may be exposed to serious dangers in the event that exploits are found.
The technological difficulties along with security threats that can arise related to ERC-404 cannot be denied. Since this innovation in the crypto world is new it will take a lot of time to slowly integrate among different wallets and platforms. But once in place, ERC-404 can then be easily utilised to serve as fungible or non-fungible tokens.
Last Say
ERC-404 token now stands as a groundbreaking revolution in the world of Cryptocurrency as it combines distinct digital assets like NFTS and traditionally used cryptocurrencies. For now, this token is still in its early experimental stages, but one cannot deny its potential to revolutionise the landscapes of NFTs as it enables liquidity increase, and fractional ownership, and creates a dynamic trading experience.
Even though potential risks cannot denied as technological innovations mature, ERC-404 brings forward exciting possibilities in the realm of future ownership and trading of digital assets.