Recently, several projects have announced the launch of enhanced versions of the ERC-404 token standard. What's the current status of the hyped standard by Pandora Labs, and can the new iterations regain the community's trust in fractional NFTs?
One of the hottest topics of February 2024 has been the innovative ERC-404 token standard, which allows for the fractionalization of non-fungible tokens. However, its popularity began to wane just days after its launch. The flagship token PANDORA fell by about 49% from its freshly formed all-time high. Other ERC-404 projects also experienced significant drops, with some nearly hitting zero.
The most significant improvement is the savings on fees, which benefits buyers of fractional tokens and addresses a limitation of ERC-404 that it couldn't overcome.
The ERC-404 sector is recording a decline. Source: Coingecko
Following such a debacle, some projects immediately announced the launch of an improved version of the ERC-404 protocol.
What's the issue with ERC-404?
ERC-404 had two significant drawbacks. The first was quite evident and related to the standard not being officially recognized and lacking mandatory independent audits for potential vulnerabilities.
The second drawback became apparent only days after its launch: excessively high gas fees. Due to the mass launch of various projects based on this standard, the average fee for swaps during peak activity reached $50. This cost was significantly higher than for standard ERC-20 token transactions, with the queue for pending transfers lasting several hours.
What's unique about ERC-X?
User @minerercx reported that they developed an improved version of the 404 standard. Moreover, the first token, MINER, based on ERC-X with a total supply of 100,000 TOKEN/NFT, has already been released.
Miner officially announced the launch of the ERC-X token standard. Source: X
The author claims that his standard addresses the issues inherent to ERC-404. The "X" extension standard is also experimental technology but more versatile.
- ERC-X can utilize functions from multiple standards, including ERC-20, ERC-404, ERC-721, and even ERC-1155.
- ERC-X boasts high gas efficiency and can be easily scaled according to the size of the project. No more fifty-dollar fees.
- The enhanced variant retains all the familiar functions of ERC-20 (issuance, transfer, and burning). However, after making a few changes to the code, a token analog can resemble ERC-721 or ERC-1155 (for multi-tokens).
Miner stated that they initially wanted to issue 1,000,000 MINER. However, since the Metamask wallet couldn't handle purchasing more than 30,000 NFTs at once, the supply was capped at 100,000.
What's unique about ERC-404 Plus?
The gaming project Bitcoin Chain Bitcoin Cats introduced an optimization protocol for ERC-404 named ERC-404 Plus, which also offers users more flexibility in choosing between NFTs and Ordinals while reducing gas fees.
Developers showcased the first asset launched based on the improved standard – BitcoinCats 404. It was created by combining BitcoinCats NFT Ordinals and ERC-404. The distribution and sale of these NFTs began on February 16, 2024, and from February 20th, BitcoinCats 404 will be traded on Uniswap, Blur, and OpenSea.
Announcement of the ERC-404 Plus launch. Source: X
So far, there's no additional information on the improved protocols. Neither the "X" nor "Plus" versions have undergone standard auditing, just like their predecessor. Saving on gas fees is a positive step. But this alone will clearly not be enough for the project's success.
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