A few days ago, ERC-404 tokens exploded in popularity on the Ethereum blockchain. But just as quickly as the hype rose, the prices of these tokens have taken a nosedive, with daily double-digit losses.
The initial excitement surrounding the experimental ERC-404 token standard has waned, paralleling a rise in Ethereum gas rates. The ERC-404 token trend may have caused a spike in Ethereum gas rates reminiscent of levels last seen in 2023.
On February 9, average transaction fees on the Ethereum network reached 70 gwei, which amounts to over $60. Peak costs increased to 377 gwei on the same day, providing comparisons with gas rates on May 12, 2023.
Ethereum gas cost chart for the last month (Source: ycharts)
The original token, developed under the ERC-404 standard, called Pandora, reached a peak market capitalization of $324 million on February 9. However, its value has since halved to $150 million, with each token now trading for less than $15,000.
Pop Chunk, an anonymous gas auditor on
The birth of ERC-404: a mix of ERC-20 and NFTs
To understand the dynamics at play, it is essential to understand the purpose of ERC-404. This token standard aims to improve on ERC-721 NFTs by binding them to ERC-20, resulting in a shareable NFT (DN) that can be owned by multiple wallets.
Each wallet can trade or deploy its fractional ownership for loans, which is similar to fractional shares or equity in traditional finance. ERC-404 represents a unique combination of ERC-20 tokens and NFTs, essentially introducing native fractionalization to the world of NFTs.
Despite its innovative approach, ERC-404 has received criticism, especially regarding transaction fees. Burning and recreating NFTs on the Ethereum mainnet is considered expensive, contributing to the perceived inefficiency of the ERC-404 implementation.
Enter DN-404: A rival implementation arises
In response to the drawbacks of ERC-404, a group of developers is about to release an alternative implementation known as Divisible NFT, abbreviated as DN-404. Cygaar, a pseudonymous developer, announced the upcoming release and highlighted the team’s dedication to creating efficient and improved code.
We have rightly been working around the clock to get the DN404 (shareable NFT) code ready this weekend.
Big shoutout to @optimizoor @0xQuit @AmadiMichaels @PopPunkOnChain @0xjustadev for going through this.
— cygaar (@0xCygaar) February 11, 2024
However, according to reports, there have been tensions between the Pandora team, the makers of ERC-404, and the developers behind DN-404.
While the crypto community waits for more information, one question remains: is DN-404 better than ERC-404? A battle is raging for symbolic supremacy, and only time will tell which will prevail.