Thrive of ERC-404 Token Standard Explained

The ERC-404 token standard is an experimental Ethereum token standard that combines the features of fungible (ERC-20) and non-fungible tokens (ERC-721) into a hybrid form.

In the ever-evolving world of the Ethereum blockchain, new standards and protocols frequently emerge to address specific needs and enhance functionality. One such development is the ERC-404 token standard. This standard is part of the Ethereum ecosystem, which hosts various token standards like ERC-20 and ERC-721. 

Understanding ERC-404 is crucial for anyone interested in blockchain technology, especially those exploring decentralized finance (DeFi) and non-fungible tokens (NFTs). This blog will break down what ERC-404 is, how it works, its benefits, some popular ERC-404 tokens, the risks involved, and conclude why it’s significant. 

Read more on Suncrypto Price Explorer, for price fluctuations in cryptocurrencies.

What is the ERC-404 Token Standard?

The ERC-404 token standard is a pioneering framework within the Ethereum blockchain that combines the properties of fungible and non-fungible tokens. Traditionally, Ethereum token standards have been divided into two main categories: ERC-20, which handles fungible tokens like cryptocurrencies, and ERC-721, which manages non-fungible tokens (NFTs) such as unique digital art or collectibles. 

The ERC-404 standard bridges these two worlds by enabling a single smart contract to manage both types of assets. One of the significant advantages of ERC-404 is its potential to streamline the development process. Developers can lower transaction costs and simplify asset management by reducing the need for multiple contracts. This is particularly beneficial for industries like gaming, finance, and digital art, where assets often need to shift their characteristics over time.

Moreover, the ERC-404 standard enhances the liquidity of digital assets. Since it combines fungible and non-fungible properties, assets can be traded more easily on decentralized exchanges. This improved liquidity can foster innovation and open up new possibilities for asset utilization.

What is the working mechanism of ERC-404 Token Standard?

ERC-404 operates by utilizing Ethereum’s smart contract capabilities to create a dynamic token standard that integrates both fungible and non-fungible properties. This token standard allows a single smart contract to manage assets that can switch between fungible and non-fungible states based on predefined conditions. 

ERC-404 Token Standard

This transformation is governed by smart contracts that define the rules and conditions for such changes. Developers can set specific triggers, such as reaching a certain level in a game or achieving specific milestones, which will convert a fungible token into a non-fungible one. This flexibility reduces the need to deploy multiple contracts for different asset types, streamlines development, and potentially lowers transaction costs.

What are the benefits of ERC-404 Token Standard?

One of the primary benefits of ERC-404 is its flexibility. By combining the functionalities of ERC-20 and ERC-721, it allows for more streamlined development processes. This can lead to reduced transaction costs and improved efficiency, as developers no longer need to deploy multiple contracts for different types of tokens. 

Additionally, the hybrid nature of ERC-404 can lead to innovative applications in gaming, finance, and digital art, where assets may need to change their properties over time. Furthermore, this standard can enhance the liquidity of assets by allowing them to be traded more easily on decentralized exchanges.

Name of top 3 ERC-404 Token Standard.

SunCrypto currently lists just one cryptocurrency built on the ERC-404 token standard. However, the platform will likely list additional cryptocurrencies in the near future. The top three most popular ERC-404 tokens by market capitalization are:

▪️ Pandora (PANDORA)

Price  Market Cap 30D Change
₹336,057.65 ₹3.36 Billion 1.63%

Pandora is a collection of 10,000 replicants that represent the first use of an experimental token standard known as “ERC-404,” developed by the Pandora team. This new standard enables tokens to comply with both the ERC-721 NFT and the ERC-20 fungible token specifications at the same time.

As a result, Pandora serves as both an NFT collection and a fungible token, making it the first time an NFT collection has been listed on CEX. Pandora’s major purpose is to stimulate the growth of the 404 ecosystem and encourage the acceptance of the ERC-404 standard. 

▪️ Asterix Labs (ASTX)

Price  Market Cap 30D Change
₹128,798.42 ₹1.22 Billion 16.10%

Asterix labs is at the vanguard of Web3 innovation, focused on establishing cutting-edge technologies and trends. The debut of the Asterix Labs project, which includes the sophisticated DN-404 smart contract code, demonstrates its commitment to creating new norms in the digital asset field.

▪️ Sheboshis (SHEB)

Price  Market Cap 30D Change
₹11,697.44 ₹233.94 Million 14.05%

Shiboshis is a collection of 10,000 non-fungible tokens (NFTs) created exclusively for Shiba Inu. They are extremely valuable to the Shiboshis community and will be forever written on the Ethereum blockchain. ShibaSwap allows you to purchase, trade, and develop your SHIBOSHI collection. 

These magnificent Shibas have a variety of traits, making each one unique and collectible. As many people have noticed, laser eyes and party hats are part of this great initial series and will be included in their next game. The Shiboshi Game will enable Shiboshi owners to employ their NFTs in strategic games.

What are the risks involved with ERC-404 Token Standard?

Despite its advantages, the ERC-404 token standard is not without risks. Its experimental nature means it has not yet been tested as extensively as other standards, potentially leading to unforeseen vulnerabilities. Additionally, the complexity of managing a hybrid token can introduce new security challenges, particularly if the smart contracts are not meticulously audited. 

Users and developers must be cautious and ensure that they understand the technical intricacies involved. Moreover, as with any blockchain technology, regulatory risks remain, especially as governments around the world continue to develop their stances on digital assets.

Conclusion

The ERC-404 token standard represents a significant step forward in the evolution of blockchain technology, offering a versatile and innovative approach to asset management. By merging the capabilities of fungible and non-fungible tokens, ERC-404 opens up new possibilities for developers and users alike. 

However, it also brings new challenges that must be carefully managed. As the blockchain ecosystem continues to grow and mature, ERC-404 may play a pivotal role in shaping the future of digital assets, driving efficiency, and fostering innovation across various industries.

To learn more about the ERC-404 token standard, go check out SunCrypto Academy.

 

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. All content provided is for informational purposes only, and shall not be relied upon as financial/investment advice. Opinions shared, if any, are only shared for information and education purposes. Although the best efforts have been made to ensure all information is accurate and up to date, occasionally unintended errors or misprints may occur. We recommend you do your own research or consult an expert before making any investment decision. You may write to us at [email protected].

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