ERC-404, an unofficial, experimental token standard on Ethereum was all the craze last week as traders took to newly launched ERC-404 tokens like Pandora, DeFrogs and Rug.
According to data from CoinMarketCap, the market capitalization across tokens in this sector is now down 33.1%, with the price of the most popular token Pandora falling 24.8% to $14,938.
Last week, Unchained reported Pandora’s debut, noting that the token had gained popularity given the fact that it was both fungible and non-fungible at the same time. This is because the ERC-404 token standard combines the properties of ERC-20 and ERC-721, making it possible to buy the token on a decentralized exchange (DEX) or an NFT marketplace.
It has also inspired similar projects built on this token standard, which are now being referred to as fractionalized NFTs, that allow multiple users to own pieces of a token. Popular NFT marketplaces like OpenSea and Blur, and even lending protocols like Wasabi have announced their support.
Since its launch, Pandora saw an uptick of more than 6,000% in price and nearly half a billion dollars worth of trading volume. However, the radical new token comes at a cost – the gas price required for an average ERC-404 transaction is more than three times as much as a normal transfer, according to PopPunk, the co-founder of gas-auditing firm Gaslite.
An average ERC404 transfer is 125,000 gas units.
More than 3x the gas of an average ERC721A transfer.
This is nightmare fuel.
Gaslite could either:
1) build a more optimized (and more compliant version of this standard)
2) ignore it and let it fade into the ether
— Pop Punk (@PopPunkOnChain) February 6, 2024
On Friday, Pandora, DeFrogs, Rug and other ERC-404 tokens saw more than $600 million worth of trading volume. Data shows that there was a spike in trading activity on Uniswap on the same day when the maximum price for network gas fees on Ethereum reached an eight-month peak of 377 gwei.