As of my last knowledge update in January 2022, there is no widely recognized Ethereum Request for Comments (ERC) standard numbered ERC-404. Ethereum Request for Comments (ERC) are proposals for technical standards on the Ethereum blockchain. Each ERC is a unique identifier that helps to categorize and reference the proposed standard.
It’s possible that new ERC standards have been proposed or developed since my last update. To get the most up-to-date information, you may want to check the Ethereum Improvement Proposals (EIPs) repository on GitHub or other relevant sources where Ethereum standards are documented.
If ERC-404 has been introduced after my last update, I recommend checking the official Ethereum documentation, forums, or community channels for the latest information on its purpose and significance. If you have specific details about ERC-404, feel free to provide them, and I can offer more targeted information based on that.
ERC-404: THE ORIGIN STORY
Every notable hero or villain has an origin story—Batman, Superman, Darth Vader, Walter White, you name it. ERC-404 follows a similar pattern. Let’s delve into its origin tale, broken down into three parts:
PART 1: THE DIAMOND IN THE ROUGH The narrative unfolds with a crypto venture named Emerald, generating significant buzz upon its recent launch. The project introduced an innovative approach by merging ERC-20 tokens (fungible) and ERC-721 tokens (non-fungible or NFTs). Investors found the concept intriguing, envisioning potential for new dynamics in the NFT market. Despite the unclear implications, the project faced turmoil when it was “hacked,” with suspicions arising that the developer might have orchestrated a rug pull under the guise of a hack. Amid the chaos, investors suffered losses, prompting a few crypto enthusiasts to engage with the Emerald developer to salvage and relaunch the project.
PART 2: THE TRUTH IS REVEALED A collaborative call ensues, with the Emerald developer receiving a crash course on resolving issues within a mere 10 minutes. However, a bombshell revelation emerges – the so-called Emerald “dev” is not a real developer but had employed ChatGPT. Yes, ChatGPT, the AI language model.
PART 3: A NEW BEGINNING Determined to move past the deceptive developer and ChatGPT involvement, the group of crypto enthusiasts opts to create a fresh project based on the same underlying concept. This marks the inception of ERC-404, an unofficial token standard amalgamating fungible and non-fungible tokens (NFTs). The maiden project adopting ERC-404 is Pandora.
With the origin story unfolded, let’s delve into the inner workings of ERC-404 and Pandora. But before that…
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SO, WTF ARE ERC-404 AND PANDORA?
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And now, we return to your regularly scheduled programming…
To recap on ERC-404 and Pandora:
ERC-404 is an unofficial token standard that blends features from both fungible tokens and non-fungible ones (NFTs).
Pandora holds the distinction of being the pioneer project utilizing ERC-404.
In essence, Pandora harmonizes the advantages of both worlds, seamlessly integrating fungible tokens and NFTs to offer native liquidity and fractionalization.
Here’s the breakdown of how Pandora operates:
Pandora issues 10,000 tokens, currently available on decentralized exchanges like Uniswap (standard practice).
When you purchase one Pandora token, you not only acquire the token itself but also receive a unique “replicant” NFT associated with that token (a distinctive twist).
The NFT is automatically minted to your wallet with randomized traits.
Should you fancy the NFT, you can choose to keep it. Alternatively, if you end up with rare traits, you have the option to sell it through an NFT marketplace.
If the NFT doesn’t pique your interest, you can sell your Pandora token. Upon selling the token, the associated NFT gets burned.
In simple terms, Pandora serves as both a token and an NFT, offering versatility to its users.
The significance of this development lies in addressing a longstanding challenge within NFT collections—liquidity issues. Traditionally, selling an NFT involved listing it on a marketplace and patiently waiting for a potential buyer, assuming there even was one.
The problem? Until that sale occurs, you’re essentially left with an illiquid JPEG, with your investment tied up.
ERC-404 brings about a transformative shift. It enables investors to sell their NFTs not by directly listing them but by selling the associated Pandora token. The key is the existence of a liquidity pool for Pandora. As long as there’s liquidity, NFTs can be promptly sold—or in this case, burned—providing a solution to the longstanding problem of NFT illiquidity. This innovation enhances the market dynamics for NFT collections, offering a more fluid and efficient way for investors to realize value from their digital assets.
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