A wise person once said, 'Tokens represent not just assets, but ideas, movements, and revolutions'. There is no other better quote available to take on the importance of tokenization. As technology revolutionized industries with its use cases, new standards have been added to the industry with some extra features by ERC-404 Development Company. Some of you may have heard about Ethereum’s ERC-404! The latest token standard which made a wave in this technology.
In this guide for beginners, we'll explain what the ERC 404 Token Standard is all about. We'll look at why it matters, what it can do, and what it might mean for blockchain technology.
What is an ERC-404 Token?
The ERC-404 token standard is like mixing two types of tokens on Ethereum: ones that are all the same ERC-20 (Fungible) and ones that are unique ERC-721 (Non-Fungible). It's called ERC-404 because it sounds like the "404 error" you see on websites.
These tokens can be traded on some exchanges or even split into smaller parts, just like regular tokens. This helps solve a problem with unique tokens, where it's hard to sell just a bit of one. This could be used for lending money and other advanced things in the future.
You can also send these tokens in pieces, which isn't exactly like splitting NFTs, but it makes it easier to use them. If you split a unique token and trade it, it disappears, but you can make a new one if you get enough pieces again.
How ERC-404 works?
The ERC-404 token standard combines ERC-20 and ERC-721 tokens, where each one represents the other. When an ERC-404 token is used, it creates an ERC-721 token and links it to an ERC-20 token. This means holding the ERC-721 token gives ownership of the corresponding ERC-20 token.
To keep ERC-721 tokens unique, the ERC-404 standard uses a mint-and-burn method. When an ERC-20 token is split, the ERC-721 token is destroyed. But when complementary fractions are combined, a new ERC-721 token is created, sometimes with different attributes.
The ERC-404 standard hasn't followed the usual process for creating Ethereum tokens and hasn't been fully reviewed. It's still experimental and may have issues. Some developers are proposing better standards like DN-404, which could improve the gas usage of ERC-404.
The Use Cases of ERC-404 Tokens
There are numerous use cases out there for ERC-404 tokens. By letting people own just a piece of something valuable, they make it easier to buy and sell parts of expensive stuff like digital art or virtual land. This helps more people to join in markets that used to be hard to get into.
Think about having a share of famous art or investing in cool virtual worlds. It's all possible because of ERC-404. These tokens mix up regular trading with special ownership rights, opening up new ideas for NFT projects like.
The ERC-404 token standard helps out a lot. Like in Art & Collectibles, it lets anyone own a piece of fancy art or rare things. In Real Estate, people can chip in to buy a part of a property even if they don't have much money. For Gaming & Metaverse, gamers can easily trade parts of their game stuff. Plus, it lets people team up to invest in startups together, making it easier for everyone to own a small piece.
ERC-404 vs ERC-20 vs ERC-721
Famous ERC-404 Tokens
ERC-404 tokens are on exchanges and NFT markets like Blur and OpenSea. Top ones like Pandora (PANDORA), DeFrogs (DEFROGS), and Monkees (MONKEES) are using ERC-404 in the most advanced ways.
- Pandora (PANDORA)
Pandora, the pioneer of ERC-404, shows how powerful the standard is by connecting each token to an NFT. This lets people buy and sell parts of NFTs easily, improving liquidity and accessibility in the NFT market. Pandora's value climbs to over $32,000 shortly after its debut, riding the ERC-404 wave. Though it's dipped since then, it's still way above its starting price of $1,500.
- DeFrogs (DEFROGS)
DeFrogs is another project like Pandora, using the ERC-404 standard. It offers 10,000 frog Profile Picture NFTs. When you buy a DeFrogs token, you're making an NFT. The ERC-404 standard helps DeFrogs by making it easy to trade tokens and NFTs.
- Anon (ANON)
ANON improves on some issues of ERC-404 by improving liquidity and rarity features. It's a step forward in the NFT world, setting a new standard with its methods for auctions and asset transfers.
- Monkees (MONKEES)
Monkees is a new player in the ERC-404 scene, offering a set of monkey Profile Picture NFTs. Monkees has grown a lot despite being new, thanks to ERC-404 making NFT trading and ownership easier.
The Importance of ERC-404 Tokens
The ERC-404 standard is important in blockchain and NFT (Non-Fungible Token) tech. Here's why:
♦ ERC-404 breaks down barriers by letting people own fractions of NFTs. This means even regular folks can invest in high-value digital art or virtual real estate.
♦ ERC-404 isn't just about accessibility. It's also blending NFTs with finance. You can use them as collateral for loans, yield farming, and more.
♦ ERC-404 is so new that it's attracting a lot of early adopters and investors. It's a hotbed for innovation, where risk-takers and visionaries are carving out the future of the digital economy.
Shedding Thoughts
In the words of Ethereum's co-founder, Vitalik Buterin, "The Ethereum protocol lays the groundwork for a new era of decentralized applications and economic systems." With ERC-404, Ethereum keeps leading the way in blockchain technology, giving power to individuals and communities. If you wanna be a part of this revolutionizing technology, consider contacting a top-rated ERC-404 Token Development Company to make this process simpler.
