A new standard for the blockchain, ERC-404 combines elements of both the ERC-20 token and the ERC-721 NFT standards, is almost ready to take the stage.
According to one of its creators, an experimental and unofficial Ethereum standard called “ERC-404” is “working around the clock” to submit an Ethereum Improvement Proposal (EIP). This standard is intended to become a combination of fungible and nonfungible tokens (NFTs).
The standard combines the technology of ERC-20 fungible tokens with that of ERC-721 one-of-one tokens, like the NFTs in the Bored Ape Yacht Club (BAYC) collection, and was created by anonymous developers under the name of a project named Pandora. The “ERC” is only a designation; ERC-404 has not undergone any kind of audit.
The inventor of the ERC-404 protocol, ctrl, recently told Cointelegraph that obtaining an authorized EIP is “one of the most bureaucratic things you can do.” A lot of politics is involved, and the process is long. A couple of weeks is the typical timeframe.
Ctrl did not reveal the identity of the proposal’s authors, but they did say that they had “success with this previously” and were “in a very good situation” to submit an EIP shortly.
Some have referred to ERC-404 as “fractionalized NFTs,” which would enable several wallets to hold a piece of a single NFT (such as a BAYC NFT) and use that amount to trade or stake in loans by binding ERC-721 NFTs to the ERC-20 tokens.
Despite the fact that the two standards that ERC-404 intends to combine “are not supposed to be mixed,” the project’s stated goal is to “fuse them in as robust a way as feasible while reducing compromises.” The standard is still in its experimental phase, according to its GitHub website.
Despite the warning, others are still questioning the project’s safety. Developer “quit” made the assertion in a Feb. 8 X post that NFTs using the ERC-404 standard may be stolen from ERC-404 tokenholders if they placed the NFT in a lending protocol that isn’t set up appropriately for ERC-404.
They said that due to improper protocol configuration, token depositors might be able to withdraw NFTs that they did not possess.
In an interview with Cointelegraph, Ctrl dismissed the post’s criticisms, saying that they “created a contract that leverages ERC-404 inappropriately,” which leaves “there’s a risk.”