ERC-404: An experimental adventure in the duality of graphics and currency

Author: dt  

Speaking of the hottest topic recently, it is definitely "ERC-404", a new token standard developed by the Pandora team. Although it does not have a formal process for the approval of Ethereum Foundation proposals, It is only an unofficial standard, but the design of ERC-404’s “coin duality” is refreshing to many people and has also brought a wave of hype. Not only is the $PANDORA token of the same name officially promoted by Pandora, The price skyrocketed by more than 100X within a week, which led to a large number of project parties rushing to issue the ERC-404 standard protocol.

This week Dr. DODO will take you to understand what the ERC-404 standard is?

Source: https://x.com/Pandora_ERC404/status/1755310974578381180?s=20

Origin

To introduce Pandora, we have to mention that there was a project called Uniswap Emerald at the beginning of this month. (EMERALD)'s new project, Emerald has launched a set of improved token standards to solve the liquidity problem of NFT, directly building liquidity on Uniswap. When you buy 1 $EMERAID on Uniswap, you will get 1 token. At the same time, you will get an NFT, 1 NFT = 1 $EMERAID token (ERC-20), but the token contract has been replaced many times due to contract vulnerability attacks, and the team is still stepping up development and repairs. Pandora was inspired by Emerald. Its three founders optimized the Emerald contract into the current ERC-404 token standard. ERC-404 attempts to solve the gap between the two traditional standards ERC-20 and ERC-721. Through a creative coding method, the two achieve unprecedented symbiosis.

ERC-404

This is called "graph The core secret of the "coin duality" design lies in loss coding. ERC-404 cleverly enables the quantity information of homogeneous tokens and the ID identification of non-fungible tokens to share the same data structure for storage, and also ensures that distinction between the two. It's like a magician identifying specific cards in the deck at the same time without changing the number of cards in the deck.

The mapping mechanism brought by ERC-404 is another highlight. It can be naturally converted between fungible tokens and its mapped non-fungible tokens. When you sell the token, the corresponding NFT will be automatically destroyed and vice versa. This not only greatly improves the liquidity of NFT itself, but also stimulates unlimited trading creativity. Users can even DIY their choice of which NFTs to burn or keep first.

Of course, as an experimental standard ERC-404 still has some technical flaws at this stage, mainly reflected in the inability to clearly specify the object when destroying the NFT. However, this can be resolved through some Tokenomics designs such as the new rarity mechanism.

Current situation

Pandora is the first ERC-based 404 token standard tokens, with a total supply of 10,000, its market value has been close to US$100 million since its launch on February 2. February 6th Pandora has transitioned to 2/4 multisig. When it comes to NFT, it is inevitable to mention the issue of rarity and fragmentation, and Pandora is no exception. Every time a new NFT is minted, it is given a different rarity. Its rarity has five levels, so it is possible Arbitrage markets thus promote liquidity.

At present, in addition to Pandora itself, there are many token projects minted according to the ERC-404 standard, and there is a separate column for them on OKX Web3 Wallet Classification.

Source: OKX web3 wallet

Author's opinion

In the author’s opinion, ERC-404 is a very pioneering experiment. Its emergence dwarfs many NFT Fi projects. NFT liquidity issues have always been It is a problem that many people have worked hard to solve, and the emergence of ERC-404 directly turned this solution into a token standard. It successfully bridged the two originally incompatible standards and opened up new opportunities for the field of digital assets. It is likely to More amazing ideas are born.

Of course, as an unofficial standard, it also implies certain security risks. We'll wait and see its subsequent evolution.