ERC-404: The Groundbreaking Ethereum Standard Set to Merge Fungible and Nonfungible Tokens
Summary:
Developed under the project Pandora, an experimental Ethereum standard called "ERC-404" aims to merge fungible and nonfungible tokens (NFTs). The project is currently in a phase of bureaucratic approval through the Ethereum Improvement Proposal (EIP). Developers assert that they're prepared to swiftly submit an EIP. Once implemented, the ERC-404 standard would allow separate wallets to own portions of a single NFT, enabling use of the fraction for trading or loan obtaining. Despite concerns over its security, major crypto wallets Binance and OKX have pledged support, and an initial ERC-404 token has seen significant market value growth.
An experimental Ethereum standard, informally named "ERC-404", is seeking to merge fungible and nonfungible tokens (NFTs), according to one of its creators. The standard is the creative endeavor of anonymous developers "ctrl" and "Acme" as part of a project called Pandora. It aims to combine the technologies of ERC-20 and ERC-721 — currently used for individual tokens like those in the Bored Ape Yacht Club (BAYC) collection. Though the name suggests it's an official Ethereum standard, this is not the case as ERC-404 hasn't undergone an approval process through the Ethereum Improvement Proposal (EIP).
In a conversation with Cointelegraph, ERC-404 developer ctrl described the approval process as a bureaucratic one that can take several weeks. Without providing names, ctrl revealed that the team preparing the proposal has had past successes and is poised well for a swift EIP submission.
The goal of ERC-404 is to link ERC-721 NFTs with ERC-20 tokens, potentially creating a fractionated NFT system. This would allow various wallet holders to own a part of a singular NFT, such as a BAYC NFT, and use their portion to trade or secure loans. While the ERC-404 GitHub page labels the project as experimental, the developers are fervently working towards fusing the two standards with minimal compromises.
However, the proposal has sparked debates regarding its security. A developer named "quit" posted a concern on Feb. 8 suggesting a potential vulnerability for NFTs using the ERC-404 standard. According to quit, if an NFT is deposited in a lending protocol not correctly set up for ERC-404, the NFT could be at risk of theft by ERC-404 token holders.
Ctrl, defending the project in an interview with Cointelegraph, dismissed the concerns by attributing such vulnerability to an erroneous implementation of ERC-404. Ctrl also highlighted that major crypto wallets from Binance and OKX have pledged their support for ERC-404. They asserted that had there been any real risk, an exploitation attempt would have occurred already. Pandora, the initial ERC-404 token introduced by the project on Feb. 5, has witnessed an over 1,850% surge in value and nearly $293 million in market capitalization in four days. CoinGecko documents 12 additional projects that have adopted ERC-404, including a frog-themed DeGods NFT collection and a collection of ERC-404-based NFT pet rocks.
Published At
2/9/2024 9:08:19 AM
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