In-depth Analysis of ERC404: Pandora's Box of NFTs or a Liquidity Revolution?

ERC404 is an experimental hybrid technical solution that combines ERC20 and ERC721, featuring native Liquidity and fragmented semi-fungibility. It establishes a corresponding conversion relationship between NFTs and FTs through the protocol, and realizes NFTs with variable built-in attributes.

Unlike the commercial path of mainstream NFTFi, the asset series under the ERC404 standard integrates existing facilities of both NFTs and FTs at the standard layer, thereby establishing bilateral Liquidity, featuring new characteristics such as "card draw", "native fragmentation", and "AMM Liquidity". If widely adopted by numerous projects, there will be more innovative gameplay, greater imaginative space, and development potential in the future.

Pandora is the first project built on the ERC404 standard, launched on February 2nd. Its 10,000 PANDORA ERC20 tokens correspond to 10,000 NFTs "Replicants". Pandora can be traded on DEXs like Uniswap, as well as on NFT markets like OpenSea. The series has five rarity levels, distinguished by color. Each time an NFT is regenerated, the rarity is randomized.

Currently, there are some issues with the ERC404 standard:

• It is uncontrollable when destroying multiple NFTs.
• Higher Gas fees
• May have security vulnerabilities without long-term verification.
• Not yet included in the official Ethereum EIP proposal

Pandora, as the first project of ERC404, relies more on the continuous operation of the project team for its future development. It cannot capture actual value from the potential widespread application of the ERC404 standard, and is likely to obtain only some emotional value.

With the popularity of ERC404, similar standards have emerged in the market, such as DN404, ERC1111, ERC2309, and ERC404+. These standards each have their own characteristics and attempt to achieve the integration of NFT and FT to varying degrees. Future development may need to focus on protocol launches and wealth effects, or community atmosphere and operational strategies.

Looking to the future, the class 404 standard may give birth to a new "blue-chip" NFT series and generate interesting application scenarios in areas such as GameFi across the chain, functional NFTs, or tool NFTs. Its programmable variable attributes and native fragmentation, combined with DeFi facilities, are expected to bring more complex value empowerment and financialization gameplay to NFTs.