What is the ERC404 protocol? Pandora rose more than 100 times in 10 days? ! | Posted by CryptoLola | Coins | February 2024
Pandora, the first project of the ERC404 protocol, is particularly popular these days. After its launch on February 2nd, the price soared to $33,000, and the current price is $20,800.
ERC404 is a protocol that mixes ERC20 (Fungible Token) and ERC721 (Non-Fungible Token NFT) protocols and is a graphical currency exchange protocol that can convert NFTs and tokens.
1. What is the ERC404 protocol?
The ERC404 protocol is an experimental hybrid ERC20/ERC721 implementation with native liquidity and fragmentation.
In layman’s terms, the protocol allows NFTs to be split and traded like tokens and is a token exchange contract.
Imagine if expensive but illiquid blue chip NFTs like BAYC could be split and traded on mainstream CEX exchanges like BN or OK as conveniently and quickly as purchasing token assets like BTC and ETH.
The ERC404 protocol attempts to solve the liquidity problem of NFTs by converting NFTs and tokens back to each other, but allowing them to be bought and sold separately at the same time.
NFTs are convertible, divisible and homogeneous tokens, and a certain number of tokens can be compounded into a given NFT to obtain the rights and benefits equivalent to NFTs.
2. What is Pandora?
Pandora is the first project built on the ERC404 token standard. 10k NFT project corresponds to 10k PANDORA ERC20 tokens. It is an experimental token standard between ERC20 and ERC721.
Pandora ERC404 tokens can be traded on platforms such as Uniswap. One Pandora ERC404 token can correspond to one Pandora NFT (called a Replicant NFT), which is a set of NFTs with different colored box images.
In the Pandora project, the ERC404 token is PANDORA. The total number of PANDORA tokens and Pandora Replicants is equal to 10,000. Replicant NFTs are Pandora Replicants.
Users can first exchange ETH and other tokens for PANDORA tokens on Uniswap V3. For users, holding PANDORA tokens is like holding fragmented NFTs (Pandora Replicants) of Pandora. The number of tokens you have determines what you own. Number of NFTs.
Pandora achieves the NFT fragmentation effect through the ERC404 standard.
For example, if they are bullish on a particular series of NFTs, users can choose to hold a certain amount of tokens instead of a full NFT. This provides more flexibility in capital allocation and lowers the dollar threshold for participating in NFT investments.
3. Burning and recasting mechanism between NFTs and tokens
Replicant NFTs are different from regular ERC721 format NFTs. Replicant NFTs have a burning and recasting mechanism that is triggered when a user performs an action such as a transfer or transaction on ERC404.
The integer ERC404 token is bound to the Replicant NFT, so if the ERC404 token changes, the Replicant NFT will also change.
1) When a user sells ERC404 tokens, the Replicant NFT in the user’s wallet is burned (destroyed).
2) When the user transfers funds, the Replicant NFT in the Sender wallet is burned and a new Replicant NFT is created in the Receiver wallet.
Each time it is recalled, the replicant NFT’s characteristics become new and its rarity may change accordingly.
If a user is not satisfied with the NFT they have, they can continuously transfer it to refresh the NFT characteristics until they get the NFT they want.
If a user does not want to change their Replicant NFT (does not want to burn and retransmit it) and wants to sell or send it to another user, they can sell their Replicant NFT on OpenSea or send it to another address.
If a user wants to change a Replicant NFT, they use an ERC404 token. If the user does not want to change the Replicant NFT, please operate on the Replicant NFT.
4. Pandora’s risks and opportunities
Pandora initially launched on February 2nd with box images in five colors and rarities, with a minimum price of $300.
After it went online, it quickly gained attention and was purchased. On February 9, it rose to 33,000 without any high prices. The highest increase was over 100 times. The current price is over $20,000.
According to data queried from the chain, there are currently over 5,300 Pandora NFTs in NFT form. The remaining portion is distributed in the form of tokens to various wallet addresses, some of which fluctuate significantly.
Currently, the ERC404 protocol is still in the experimental stage. Some believe this will bring new liquidity and gameplay innovations to NFTs. Others cannot see specific applications and believe that NFTs or tokens without permission are just memes and have no specific value.
However, as Pandora’s price continues to rise and break out of the circle, more people are paying attention to the ERC404 protocol. Some people went to Pandora first to hold the currency and watch its future developments.
After all, new things evolve very quickly and both 10x and 0 are short-term.
The above is only personal opinion and does not constitute investment advice. My name is CryptoLola and I follow the cryptocurrency market and web3.