What is ERC-404?

9 Feb 2024

ERC-404 appears as a new and experimental token standard in the cryptocurrency market. This standard combines the features of the ERC-20 and ERC-721 token standards, allowing us to have a whole new range of products and the advantages of both standards.

What is ERC-404?

ERC-404 is a new and experimental token standard in cryptocurrency. It is a blend of features of both ERC-20 and ERC-721 Token Standards.

What is the Difference from ERC-20 and ERC-721?

ERC-20: Used for fungible tokens such as ETH, LINK, MKR.
ERC-721: Used for non-fungible tokens (NFT) such as Ethermon, MyCrypto, Cryptodoggies.
By combining these two standards in a single framework, ERC-404 offers brand new opportunities for token usage and flexibility, especially in the fields of decentralized finance (DeFi) and NFT.

How Does ERC-404 Work?

We can best explain the working principle with an example. Pandora, the first project to use the ERC-404 standard, offers an offering of 10,000 tokens and 10,000 NFTs. Every user who holds a non-fungible token also receives an NFT linked to the token. When a user buys or sells $PANDORA, the system mints or burns the NFT.

Advantages: NFTs have the potential to solve the liquidity problem. One of the biggest problems of NFTs is the liquidity problem. He will revolutionize the NFT market by solving this.

New usage opportunities in DeFi and NFT fields: By combining the advantages of both standards, it offers brand new usage opportunities in DeFi and NFT fields.

ERC-404 Disadvantages

Lack of auditing: Being a new standard and not audited causes significant security vulnerabilities.

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