- ERC404 is a new token standard for Ethereum that combines attributes of NFTs and fungible tokens.
- For NFT traders, this means increased liquidity and trading flexibility.
Ethereum tokens fall into two broad technology category standards: non-fungible ERC721 and fungible ERC20.
NFTs (non-fungible tokens) are designed to be proof of ownership on a blockchain, and each token of this type is unique. Fungible tokens, or simply known as cryptocurrencies, are not unique. One Shiba Inu token is the same as any other Shiba Inu token.
However, a new experimental token standard called ERC404 attempts to create a hybrid of these two standards. Its implementation through Replicant’s NFT collection has piqued the interest of traders, resulting in the decentralized exchange’s total trading volume of approximately $87 million and the NFT market’s total trading volume of just under $1 million in just one week since its launch. Reached.
Users can sell Replicants on popular NFT marketplaces such as Blur and OpenSea, or sell fungible Replicant tokens on popular decentralized exchanges such as Uniswap.
Stay ahead with our weekly newsletter
The price of one replicant has increased from approximately 0.38 ETH on February 3rd to over 4.26 ETH, giving the collection a fully diluted value of over $88 million and placing it among the top 15 NFT collections.
New Ethereum token standard
ERC404 is an experimental token standard for Ethereum, meaning it has not yet been fully externally audited.
A token standard is simply a set of rules that smart contracts must adhere to. The ERC20 token standard sets a set of rules that tokens must adhere to, and the ERC721 token standard sets the rules for non-fungible tokens.
By combining these standards, each replicant retains the qualities of both a token and an NFT.
Join our community for the latest stories and updates
This is different from split NFTs, which split a single NFT into tradable parts. This allows a user to sell shares of a single his NFT rather than the entire collection.
ERC404 significantly increases the liquidity, or availability of funds, for NFTs, which are generally highly liquid assets.
Users don’t have to list their NFT and wait for someone to buy it. You can sell your tokens at any time on a decentralized exchange like Uniswap, which has $19 million of liquidity in its PANDORA/WETH trading pool.
The new token standard has some strange implications.
If the user then sells the fungible token, the NFT linked to it will be destroyed. This dynamic, where buying one full token creates a new NFT, has driven trading volume on decentralized exchanges to NFT marketplace trading as users look to “reroll” to get their hands on the best red replicants. The amount has increased explosively. Tiers of rarity are available. In NFT collections, rare properties command higher prices.
This frenzy has benefited liquidity providers in the Uniswap pool of tokens. His 1% commission on trades in this pool has cost him just under $1 million in fees since February 3.
Blur integrated the new standard into its market within just two days. Telegram trading bot BananaGun and others today announced support for ERC404. Several other NFT projects have also been launched or announced to be launched using this new experimental token standard.