What is ERC-404? Learn about Ethereum's new experimental token standard

Ethereum (ETH) price is still “flat” despite the hype about the Ethereum ETF. But the launch of ERC-404 could be an important catalyst, starting ETH's price increase.

What is ERC-404?

ERC-404 is an experimental token standard built on the Ethereum blockchain that aims to combine the functions of ERC-20 tokens (fungible tokens) and ERC-721 tokens (NFTs) into a single standard . This means that ERC-404 tokens can be both fungible and non-fungible, depending on the specific implementation.

In short, ERC-404 is a new method of identifying digital assets such as tokens or collectibles on the internet.

Key features of ERC-404:

Composability: ERC-404 tokens can represent both fungible and non-fungible assets, providing flexibility for different use cases.

Native Liquidity: Unlike traditional NFTs, ERC-404 tokens have a built-in liquidity mechanism, allowing for easier trading and partial ownership. Programmable scarcity: ERC-404 token supply can be dynamically adjusted through code, paving the way for groundbreaking tokenomic models.

How does ERC-404 work?

An NFT of the base project is awarded to a wallet with the full ERC-404 token. When tokens are sold, NFTs are automatically burned. Both tokens and NFTs can be traded independently.

Is ERC-404 secure?

ERC-404 is still untested, just an experimental standard. Its development did not follow the traditional path – Ethereum Improvement Proposal (EIP). Additionally, it has not undergone comprehensive independent auditing but has been extensively tested.

The only similarity ERC-404 and other ERC standards such as ERC-20 or ERC-721 share is the name “ERC”, which stands for “Ethereum Request for Comments”.

Projects use the ERC-404 token standard

Pandora and DeFrogs are the only two projects implementing the ERC-404 token standard. According to data from CoinGecko, the price of DEFROGS – the second project's token – has increased 99.29% in the past day.

Ctrl, the team behind the launch of the experimental token standard, also launched Pandora. PANDORA token started trading on February 2 at 212 USD and is currently trading at 21.8 USD.



PANDORA/WETH 4-hour chart. Source: TradingView

Will ERC-404 push Ethereum price higher?

It is unlikely that the launch of projects based on the ERC-404 standard will push Ethereum prices higher. Since Ethereum is the second largest cryptocurrency by market capitalization, it is highly correlated with Bitcoin price and is unlikely to be affected by new sectors.

But with Bitcoin's current bullish trend, we can be bullish not only on Ethereum but also ETH-related altcoins.