Decoding the Recently Popular ERC404 Token Standard

Background of the ERC404 Standard

ERC404 attempts to “merge” certain features of the ERC-20 and ERC-721 standards by combining the divisibility of ERC-20 tokens with the liquidity of ERC-721 NFTs. ERC404 tokens can be traded on platforms like Uniswap, similar to fungible tokens. At the same time, one ERC404 token corresponds to one NFT (known as a Replicant NFT). The mathematical relationship between them is as follows:

nReplicant NFT = [nERC404]

Where nReplicant NFT represents the quantity of Replicant NFTs, nERC404 represents the quantity of ERC404 tokens, and [n] denotes the largest integer not greater than n.

In simple terms, owning a whole token allows holding an NFT. For example, if a user holds 0.5 tokens, they possess 0 NFTs; if they hold 1 token, they possess 1 NFT; if they hold 1.5 tokens, they possess 1 NFT; if they hold 2 tokens, they possess 2 NFTs; if they hold 2.5 tokens, they possess 2 NFTs, and so on.

The First Project Utilizing the ERC404 Standard: Pandora

Pandora is the first project built on the ERC404 token standard, which is an open-source experimental token standard for creators and developers. ERC404 is a hybrid of ERC20/ERC721 implementations, characterized by native liquidity and divisibility.

Pandora is co-founded by @maybectrlfreak (ctrl) and @searnseele (Searn), with the core standard ERC404 released on Github by former Coinbase software engineer @0x acme (Acme).

• @maybectrlfreak: Also an angel investor in startup Syndicate. Syndicate's Twitter profile shows its first tweet posted on January 22, which made early investments in BRC20 and Ordinals trading terminal BeFi Labs. Since then, no other content has been posted except for BeFi Labs-related updates.

• @searnseele (Searn)

• @0x acme (Acme): Acme does not mention Pandora in their Twitter bio; however, they have released the ERC404 standard on Github. Acme has previously worked at Coinbase.

Risks and Opportunities

The ERC stands for Ethereum Request For Comment, which is used to document various development standards and protocols at the application level on Ethereum. In designing an EIP document, it should provide a concise technical specification of the feature and its underlying principles, while the authors of the EIP write and maintain the document within the community consensus. In short, an ERC is always an EIP.

However, ERC 404 is currently only an experimental standard and has not been included in formal Ethereum EIP proposals. New methods of asset issuance often create opportunities, and it remains to be seen how ERC404 will be implemented in the future.