Ethereum gas fees sharply rose recently after the introduction of the ERC-404 token standard. This new token standard allows for the creation of “semi-fungible” tokens that combine features of both fungible (like ERC-20) and non-fungible (like ERC-721) tokens.
The ERC-404 token standard enables unique use cases like fractionalized NFTs and dynamic token supply.
Gas fees on the Ethereum network surged to levels not witnessed since May 2023. On February 9, 2024, an average transaction on Ethereum cost 70 gwei (~$60).
ERC-404 is an experimental Ethereum standard built by the Pandora team that combines the features of fungible tokens with non-fungible tokens. The result is a new type of token called a ‘semi-fungible’ token.
The token standard works by linking every issued token to an NFT.
Pandora, the Original ERC-404
Pandora was the first project to use the ERC-404 standard and has a total supply of 8,000 tokens. Each of the tokens is linked to a unique NFT from a collection of 8,000 digital artworks. The artworks are stored on IPFS, a decentralized file storage system, viewable on the Pandora website.
Users can trade, transfer, and burn their tokens at any time while retaining the ownership of the underlying NFT. Users can also swap their tokens for different NFTs within the same collection, creating a dynamic and customizable token supply.
ERC-404 offers several benefits over existing token standards, such as:
- Fractionalization: ERC-404 enables users to own a fraction of an NFT, rather than having to buy the whole thing. This lowers the entry barrier for NFT collectors and investors and creates new possibilities for NFT valuation and liquidity.
- Interoperability: ERC-404 is compatible with existing ERC-20 and ERC-721 standards, meaning that ERC-404 tokens can be used in any platform or protocol that supports these standards, such as decentralized exchanges, lending platforms, and NFT marketplaces.
- Innovation: ERC-404 is a novel and experimental token standard that opens up new avenues for creativity and exploration in the crypto space. ERC-404 can be used to create new types of NFTs, such as dynamic, interactive, or generative ones, as well as new types of tokenomics, such as deflationary, inflationary, or elastic ones.
Despite these benefits, the impact on mainnet Ethereum is that of a weed choking a crop. The exorbitantly high gas fees render Ethereum mainnet unusable for normal crypto users (who are the majority).
‘“Ctrl”, one of the Pandora developers said the team is working on a solution to reduce gas fees by around 300% to 400% to foster wider adoption and integration of the protocol.