ERC-404 - Pandora: New Experimental Token Standard

9 Feb 2024

What is ERC-404?

  Developed by   the Pandora team, ERC-404 is a new  unofficial token standard that aims to bridge the gap between fungible tokens and NFTs.

How it works  : ERC-404 creatively combines elements from the ERC-20 and ERC-721 standards that were not traditionally designed to interact. The ERC-721 approach deviates from the norm by relying on token mints and burns for partial transfers. 

“This aspect of the concept design was intentionally designed with the goal of creating an NFT with native fractionalization and liquidity, and encourages aspects of commerce/participation to create unique feature sets,” the standard’s GitHub page reads. 

Why it matters  : We've seen NFT partitioning protocols where you can lock an NFT and effectively stake against it. In contrast, ERC-404 is designed to achieve native sharding in NFT projects that implement the standard. This opens up new ways to try and trade NFTs.

Why Not Official?

ERC-404 is an unofficial standard whose connection to the "ERC" status is in name only. In other words, it was not developed through the traditional Ethereum Improvement Proposal (EIP) and Ethereum Request for Comments (ERC) processes, which ensure that any changes or new features in Ethereum are subject to extensive discussion and community review.

Official ERCs such as ERC-20 and ERC-721 have been extensively reviewed for security, usability, and compatibility within the Ethereum ecosystem  .  This system of official promotion helps reduce the risks associated with the implementation of new standards. Despite ERC-404's innovations, the lack of formal review means potential vulnerabilities and inefficiencies may not have been adequately addressed.

Is it risky?

Innovation is important, but the risks of integrating unaudited and potentially flawed systems into projects can compromise the security of the Ethereum ecosystem. The many unofficial standards floating around will provide black hats with many inaccessible exploitation targets. The adoption of ERC-404 without official recognition raises concerns about the precedent it sets for other experimental standards.

Pandora 101

Pandora, the first project built on the ERC-404 standard, offers 10,000 ERC-20 tokens and 10,000 associated “Replicant” NFTs.  If you purchase a full  PANDORA token on an exchange, 1 Replicant NFT will be minted in your wallet. If you sell 1 PANDORA token, its linked NFT will be burned.   ‍ How

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