Introducing the ERC-404 Token Standard: A Guide to the Experimental Semi-Fungible Token
In the ever-changing world of cryptocurrency, a new addition has been made to the ERC token standard family. It’s called the ERC-404, and it’s an experimental semi-fungible token that combines elements of fungible and non-fungible tokens. This guide will provide you with an overview of this new token standard.
What Is the ERC-404 Token Standard?
The ERC-404 token standard is a mix of the popular ERC-20 and ERC-721 tokens. It combines the features of both fungible and non-fungible tokens. The ERC-20 token is used for crypto assets, while the ERC-721 token is used for NFTs. The ERC-404 token brings together these two standards.
This experimental token standard is a semi-fungible token but is not yet an official token. It was created by ‘crtl’ and ‘Acme’ who worked with the ERC token standards to develop this new standard.
One challenge with existing standards is that it’s not easy to buy fractionalized ERC-721 tokens. However, the ERC-404 token solves this problem by providing a native option to fractionalize NFTs.
The new ERC-404 standard goes a step further by allowing various wallets to own a single NFT. This enables users to tokenize their exposure and monetize it through loans or staking, without relying on third-party protocols.
How Does the ERC-404 Token Work?
The ERC-404 token standard uses a burn and mint mechanism to transfer fractional NFTs. When you buy a full token, the linked NFT is minted to your wallet. Selling only a fraction of the token burns the linked NFT, and buying enough fractions again burns a new NFT.
For example, if you buy 10.5 tokens, you will mint 10 NFTs and receive 0.5 tokens. When transferring NFTs between wallets, they are burned in the originating wallet and minted again in the destination wallet. Selling ERC-404 tokens for ETH results in burning all NFTs back into the smart contract.
This mechanism allows you to sell NFTs at any time without waiting for a buyer interested in a complete, non-fractionalized NFT.
Projects that Use ERC-404 Tokens
The first collection to use the ERC-404 token is Pandora, which has a 10k NFT collection listed as a crypto token. DeFrogs is another collection of 10,000 Pepe the Frog NFTs on ERC-404 tokens. Other collections and platforms like Solana and Arbitrum have also adopted this token standard.
Top-tier exchanges like OKX and Binance have provided support for ERC-404 tokens in their Web3 wallets, further boosting its popularity.
Conclusion
The ERC-404 token standard offers an exciting combination of features from the ERC-20 and ERC-721 tokens. While it’s not an official Ethereum token standard yet, it is gaining popularity rapidly. As with any new technology, there may be risks involved, but the team behind it is working hard to address them.
Please note that this information is not financial advice and cryptocurrencies carry high risks. Do your due diligence before making any investments.
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