Today, it’s ERC-404.
ERC-404 is a new kid in town!
Well, not a kid, literally but figuratively.😂😂
We all know the BEEF with ETH gas fees, right?
Or am I the only one who pays exorbitant fees to get my ETH transactions done?
I hope not because I can cry.😭😭
Anyway, there’s no doubt that the web3 space is moving rapidly.
About a week ago, a protocol brought up the concept of ERC-404.
ERC 404 is a new token standard that’s a combination of Fungible tokens (ERC-20) and non-Fungible Tokens (ERC-721).
This novel narrative aims to revolutionize the liquidity surrounding NFTs and eradicate the need for a buyer to plan the purchase of an NFT.
Features of ERC-404
- Flexible functionality
ERC-404 tokens are a combination of Fungible and non-fungible tokens, providing a versatile range of applications.
2. Innate liquidity
In contrast to the traditional NFTs, ERC-404 tokens integrate inherent liquidity features in order to simplify trade and bring about fractional ownership.
3. Scarcity
With programmed mechanisms, the supply of ERC-4004 tokens is adjustable using a code, making it a scarce asset.
How does ERC 404 work?
The interesting aspect of ERC-404 is that the sale of a fungible token leads to the simultaneous destruction of its corresponding NFTs.
So, if you hold 1 ERC-404 token, you’ll get 1 NFT replica.
If you hold a 0.5 ERC-404 token, you won’t get any NFT.
If you hold 2 ERC-4040 tokens, you’ll get 2 NFTs.
If you sell 1 ERC-404 token, your corresponding NFTs will be burnt.
Pandora is the first mover of this narrative and is currently sitting prettily at $164M — 7 days after its launch.
Other protocols are building on ERC-404, and it might be a success.
However, you shouldn’t forget the Blockchain Trilemma that DeFi protocols and narrative are supposed to solve. They are:
- Decentralization
- Scalability
- Security.
Think about them and how they are related to ERC-404.
Also, remember the Gas fee issues on Ethereum.
My point is to do more research before investing in ERC-404, as it’s still new and considered an experiment.
I’m Zee, and I’m a DeFi content strategist/researcher. Also, I simplify content for DeFi protocols.
If you’ve learnt something here, kindly give a clap, like, and follow me for more DeFi research tips.
