1/ What is #ERC404?
ERC404 is an unofficial, experimental token standard that aims to combine the characteristics of fungible tokens and NFTs. Note that it has not gone through the usual Ethereum Improvement Proposal (“EIP”) process.
2/ How does it work?
Projects that implement ERC404 will offer #ERC20 fungible tokens and connected #NFTs. Buying 1 full ERC20 token will result in the minting of an NFT in their wallet. If a user has less than 1 full ERC20 token, they will not be entitled to the NFT.
3/ What’s the impact?
A) Liquidity 💧 ERC404 aims to improve the liquidity of associated NFTs by enabling trading through a liquidity pool of fungible tokens. Instead of listing an NFT and waiting for a buyer, holders can sell the token readily on a decentralized exchange.
B) Fractionalization 🧩 In contrast to fractionalization protocols where an NFT is locked and shares are issued against it, ERC404 aims to achieve native fractionalization within NFT collections. Traders can buy parts of an NFT in the form of ERC20 tokens.
@Pandora_ERC404 is the first project using the ERC404 standard. There are 10K ERC20 tokens and 10K “Replicant” NFTs. Buying 1 PANDORA token will result in 1 Replicant NFT being minted, whereas selling 1 PANDORA token results in the Replicant NFT being burnt.
4/ Risks
Take note that ERC404 has not been audited and is not an official token standard. There may be smart contract risks or other vulnerabilities that have not been discovered. Users should do their own due diligence.
https://etherscan.io/token/0x9e9fbde7c7a83c43913bddc8779158f1368f0413