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How ERC-404 Brings Fungible Tokens and NFTs Together

How ERC-404 Brings Fungible Tokens and NFTs Together

Non-fungible tokens (NFTs) have been one of the hottest trends in the crypto world, attracting millions of dollars and users to the digital art, collectables, gaming, and metaverse sectors.

However, NFTs also have some limitations, such as high transaction costs, low liquidity, and lack of interoperability. To address these challenges, a new token standard has emerged on the Ethereum blockchain called ERC-404. This standard combines the features of fungible tokens (FTs) and NFTs, creating a new type of token that can be both fungible and non-fungible, depending on the use case.

Today we explore what ERC-404 is, how it works, what are its benefits and drawbacks, and whether you should invest in it or not.

Key Takeaways

  • ERC-404 is an experimental token standard aiming to merge fungible and non-fungible tokens on the Ethereum blockchain.
  • It addresses NFT limitations like high costs and low liquidity and offers flexibility and enhanced interoperability, including features like fractional ownership.
  • However, it’s not yet an official standard and may lead to complexities and competition.
  • While ERC-404 brings innovation, some view it as over-hyped and potentially overshadowed by existing standards like ERC-1155.
  • Its true impact remains to be seen in both technology and market adoption.

What is ERC-404?

ERC-404 is an experimental token standard built on the Ethereum blockchain that aims to combine the functionalities of ERC-20 tokens (fungible tokens) and ERC-721 tokens (non-fungible tokens, or NFTs) into a single standard.

This means that ERC-404 tokens can be both fungible and non-fungible, depending on the specific implementation. For example, a token can start as an FT and be traded with other tokens of the same kind without losing any value, but once it is used or redeemed, it can become an NFT and gain unique characteristics and value. Alternatively, a token can start as an NFT and be fractionalized into smaller units that can be traded as FTs, but once the units are recombined, the token can regain its NFT identity.

The idea was proposed by the Pandora team, a project that is building a metaverse platform where users can create, explore, and trade digital worlds and assets. The first token to use this standard is the $pandora token, which represents a Pandora Box, an NFT that contains a Replicant, a unique digital creature that can evolve and interact with other Replicants. The $pandora token can be traded as an FT on decentralized exchanges (DEXs) like Uniswap, but once it is opened, it reveals the Replicant NFT inside, which can have different attributes and values.

How Does ERC-404 Work?

ERC-404 works by linking every issued token to an NFT, which acts as the source of truth for the token’s state and ownership. The NFT can have a base unit, which defines the minimum amount of tokens that can be transferred or exchanged.

For example, if the base unit is 100, then the token can be divided into 100 fractions, each representing 1% of the NFT. The token can also have a total supply, which defines the maximum number of tokens that can be issued for the NFT. For example, if the total supply is 1000, then the token can be minted up to 1000 times, each representing 0.1% of the NFT.

The standard defines four main functions for the token contract:

  • Mint: This function allows the token creator to issue new tokens for a given NFT up to the total supply limit. The function also checks if the NFT exists and if the token creator is the owner of the NFT.
  • Burn: This function allows the token holder to destroy tokens and reduce the total supply. The function also checks if the token holder owns enough tokens to burn and if the NFT exists.
  • Transfer: This function allows the token holder to send tokens to another address. The function also checks if the token holder owns enough tokens to transfer and if the NFT exists. Additionally, the function updates the ownership of the NFT according to the token balance. For example, if the token holder transfers all their tokens to another address, the NFT ownership is also transferred to that address. Conversely, if the token holder receives enough tokens to reach the base unit, the NFT ownership is also transferred to them.
  • BatchTransfer: This function allows the token holder to send multiple tokens to multiple addresses in one transaction. The function also checks if the token holder owns enough tokens to transfer and if the NFTs exist. Additionally, the function updates the ownership of the NFTs according to the token balances.

What Are the Benefits of ERC-404?

ERC-404 offers several advantages over the existing token standards, such as:

  • Increased liquidity: Being able to trade NFTs as fungible tokens on DEXs massively increases liquidity. This solves a major limitation with existing NFTs, which often suffer from low trading volume and high price volatility due to their uniqueness and scarcity.
  • Lower costs: Being able to batch transfer multiple tokens in one transaction reduces gas fees and saves time. This also solves another limitation with existing NFTs, which often incur high transaction costs due to their individuality and complexity.
  • Greater flexibility: Being able to switch between fungible and non-fungible modes gives token creators and users more options and possibilities. For example, token creators can use ERC-404 to create dynamic and interactive NFTs that can change their state and value based on certain events or actions. Token users can use it to access fractional ownership of NFTs, which lowers the barrier to entry and expands the potential market.
  • Enhanced interoperability: ERC-404 tokens can interact seamlessly with protocols and platforms in both the fungible token and NFT spaces, bridging these previously disconnected areas. For example, ERC-404 tokens can be used as collateral, governance, or utility tokens in DeFi protocols, or as assets, rewards, or currencies in NFT platforms.

What Are the Drawbacks of ERC-404?

ERC-404 is not without its challenges and limitations, such as:

  • Experimental status: As mentioned above, the ERC-404 is not an official Ethereum standard yet, but rather an experimental one that is subject to change and improvement. This means that there may be bugs, vulnerabilities, or compatibility issues with the standard, which could pose risks for token creators and users. Moreover, there may be legal and regulatory uncertainties regarding the status and treatment of such tokens, especially in jurisdictions that have strict rules for crypto assets.
  • Complexity: It is a complex and novel token standard that requires a deep understanding of blockchain technology and smart contracts. As this is new, developers who want to create them need to study the standard and its functions. Users who want to interact need to have a clear grasp of the token’s behaviour and logic, as well as the risks and benefits involved.
  • Competition: ERC-404 is not the only token standard that aims to combine fungibility and non-fungibility. There are other standards that have similar or different approaches, such as ERC-998 and ERC-1155. These standards may offer different features, advantages, or disadvantages than ERC-404, and may attract more adoption or support from the crypto community. Time will tell.

Should You Invest in ERC-404?

The answer to this question depends on your risk appetite, investment goals, and research. ERC-404 is a new and innovative token standard that has a lot of potential but also a lot of uncertainty. Investing in them could be rewarding but also risky. Therefore, you should do your own due diligence before investing in any crypto asset and only invest what you can afford to lose. Here are some factors to consider before investing:

  • The token’s use case: What is the purpose and value proposition of the token? How does it benefit from the ERC-404 standard? What problem does it solve, or what opportunity does it create? How does it compare to other tokens in the same or similar sector?
  • The token’s performance: How has the token performed in terms of price, volume, and market capitalization? What are the factors that influence its demand and supply? What are the trends and patterns that indicate its future direction?
  • The token community: How large, active, and engaged is the token community? How do they support and promote the token? How do they interact with the token team and other stakeholders? What are their feedback and opinions on the token?

Looking Forward

Taking this opportunity, I spoke to people in the industry asking how they look at this new standard. The feelings on the ground are mixed.

Batulzii, former chairman of the board at Cryptocurrency & Blockchain Association of Mongolia highlighted that ERC-404 increased liquidity for NFTs: “By making NFTs divisible and tradable like tokens, it helps overcome the inherent illiquidity issue of traditional NFTs. This can attract more investors and boost the overall NFT market.

“Fractional ownership unlocks new possibilities for ownership and investment, as people can now access valuable NFTs they couldn’t afford entirely, opening up participation to a wider audience.”

Batulzii, who is also the technology lead and founder of Sanchirtech, also warned that this new standard is still experimental and untested and that its complex design could harbour security vulnerabilities that haven’t been fully explored.

Alex Atashkar, co-founder of Seed.Photo, articulated the vision of their platform as the NFT marketplace dedicated exclusively to photographers. He emphasized the significance of not just showcasing art but anchoring it in genuine ownership and said that Seed.Photo’s is integrating the ERC-404 standard

Atashkar highlighted the team’s excitement about the potential of the ERC-404 standard for its unique capability to enable shared ownership of a single NFT by multiple wallets, a breakthrough in the digital art space. This feature opens up myriad possibilities, including tokenization for diverse purposes such as securing loans, staking, and collective art ownership.

From a crypto exchange perspective, I have asked John Inzo, Social Media Manager at HTX to comment on the topic. “This will be an interesting experiment to see how this will help or hurt Ethereum long-term.”

The Bottom Line

To sum things up, ERC-404 is a hybrid token standard that combines the features of fungible and non-fungible tokens, creating a new type of token that can be both fungible and non-fungible, depending on the use case.

I must say that ERC-404 is an exciting and innovative token standard that is revolutionizing the NFT space, but it is not for everyone. To be very honest, I personally think that ERC-404 is more hype than reality. The previous ERC-1155 could almost achieve the main functions of ERC-404, and ERC-1155 is more mature than ERC-404. The latter now seems to be just a modified version of the former. But we shall wait and see how the technology — and market reaction — plays out.

 

 

Source: https://www.techopedia.com/how-erc-404-brings-fungible-tokens-and-nfts-together

 

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
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Hackernoon Meet the Writer Anndy Lian: “Let’s work together to make crypto better”

Hackernoon Meet the Writer Anndy Lian: “Let’s work together to make crypto better”

This story is a part of Hacker Noon’s Meet the Writer series of interviews. The series is intended for tech professionals contributing the most insightful Hacker Noon stories to share more about their writing habits, ideas, and professional background (and maybe a hobby or two).

If you too would like to start contributing to Hacker Noon, you can do so here.

 

So let’s start! Tell us a bit about yourself. For example, name, profession, and personal interests.

My name is Anndy. I’m a business strategist and experienced serial entrepreneur with over 15 years of experience in Asia. I’ve worked in various industries for local, international, and publicly traded companies. I am currently Chairman of BigONE Exchange and Chief Digital Advisor at the Mongolian Productivity Organisation.

I’ve also written a best-selling book titled “Blockchain Revolution 2030”. With my co-authors, we share insights on how blockchain technology plays an important foundation for the Fourth Industrial Revolution.

I recently joined the EG Association, a social impact-driven organization that aims to use cryptocurrency to do good. To date, we have deployed more than $3 million supporting social impact initiatives on the ground.

 

Interesting! What was your latest Hackernoon Top story about?

My recent article focused on the rise of so-called reflective tokens, which are starting to be used more and more by crypto startups, such as SafeMoon. The tokenomics model differs significantly from that of other DeFi tokens. In simple terms it works by automatically charging a tax, which is usually 10% on each transaction.

The reflection mechanism is a relatively new concept in cryptocurrency circles, and it still requires a lot of fine-tuning before it can be widely adopted by other projects. However, in principle, it reduces panic selling to a bare minimum, which could be significant for the DeFi industry.

 

Do you usually write on similar topics? If not, what do you usually write about?

I think it’s important to write about the diversity of subjects in the blockchain and crypto industry, as it’s a sector that growing so quickly and with a lot of opportunities. I’m fascinated about ‘connecting the dots’ between business and technology, a great example being the use of DeFi and NFTs in developing an open metaverse.

 

Great! What is your usual writing routine like (if you have one?)

Before starting to write I believe it’s important to have a routine for reading each day. I try to find time to catch up with the main news headlines, as well as the main crypto news sites like Cointelegraph. Then when I come to writing I find that reading helps make my articles both accessible and valuable. I also get my inspiration from the governments that I am advising, their problems and questions become part of my writing content too.

 

Being a writer in tech can be a challenge. It’s not often our main role, but an addition to another one. What is the biggest challenge you have when it comes to writing?

The challenge is often one of translation, explaining technical details around say a new form of tokenomics to an interested but non-technical audience such as crypto investors.

 

What is the next thing you hope to achieve in your career?

I want to share the right kind of crypto knowledge with people. Right now many of the people I see in various communities are not being real. Some of them want their government to be decentralized, others want to be rich overnight by doing nothing, then some others are just here to create FUDs. If proper information is being shared and the users are aware of what is really happening, such ‘behaviours’ would be minimised.

Maybe this is not a career goal, it is more like an industry-wide goal that I set for myself.

 

Wow, that’s admirable. Now, something more casual: What is your guilty pleasure of choice?

Since getting grounded and not being able to travel, I have been very involved in donations and charitable works. In fact, those who know me, know that I am donating more than I spend. My guilty pleasure, for now, is walking into Hermes, buying a few pairs of shoes instead of donating. Then again, Zoom meetings did not need me to travel much, maybe a comfortable Uniqlo t-shirt would do just fine.

 

Do you have a non-tech-related hobby? If yes, what is it?

I enjoy travelling, meeting new people from all walks of life, and sharing ideas.

 

What can the Hacker Noon community expect to read from you next?

I’m always on the lookout for new topics in crypto and blockchain that illuminate and inspire my readers! I might be talking more about metaverse and gameFI. Let’s see.

 

#Thanks for taking the time to join our “Meet the writer” series. It was a pleasure. Do you have any closing words?

“The time is always right to do the right things.” I hope to gather more like-minded people to do that together for the crypto industry. Let’s work together to make crypto better!

Lastly, it’s great to join the Hacker Noon community and to share my writing on crypto and blockchain.

 

Original Source: https://hackernoon.com/meet-the-writer-anndy-lian-lets-work-together-to-make-crypto-better

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j

Mid-Day Mumbai News: How reflective tokens and real-world use cases can work together

Mid-Day Mumbai News: How reflective tokens and real-world use cases can work together

Mumbai`s homegrown newspaper – Mid-Day is a 41-year-old brand. Thank you for listening to my inputs.

The media outlet has quoted my points on how reflective tokens and real-world use cases can work together. Taking Dogecola as an example. The Cola sold will be used as a form of funds to support its crypto pricing. The added-on elements such as GameFI and NFT would create a better bond and interaction between the brand and the consumers.

The combination may not be rocket science but they are certainly making traditional companies think about how tokenization would work for their business.

_____________________________________________________________

Why DogeCola Is the Reflective Token To Watch

Following news that the ‘king’ of meme coins Dogecoin has relaunched its foundation with plans to become a serious global cryptocurrency, is DogeCola ‘on trend’ as a  meme coin worth taking seriously? Meme coins are tokens backed by crypto influencers and investors have rapidly increased in popularity. CoinMarketCap estimated there were more than 5,000 meme coins available to investors by late June. Created as a joke meme back in 2013 Dogecoin started the trend, rising to prominence after Tesla CEO Elon Musk tweeted about the novel token in April 2019, replying to a tweet saying “Dogecoin might be my fav cryptocurrency. It’s pretty cool.”

While meme coins are a type of cryptocurrency, a key difference between the likes of Dogecoin and currencies like Bitcoin, comes down to utility. Namely that most meme coins, serve no real-world purpose. Even more reason why DogeCola, which is both a reflective token and a soft drink brand, has such potential to grow the meme coin market more sustainably in the future. In just the past week the cola-branded meme token, has delivered on its promise of distributing 1,000 sample cans of the fizzy drink to its token holders. And as its doubling-down on its listing on BigONE exchange with a staking activity, it’s certainly appears worth a closer look.

In this article we’ll therefore review how the ‘reflective’ token mechanism works to maintain price stability, the role the DogeCola soft drink brand plays in its growth, and what this could mean for the chances of success in such a fast-moving meme-market place.

 

Taking a look ‘under the hood’ of DogeCola

Auto-boost function: The auto-boost feature helps distinguishes DogeCola from the other standard meme tokens on the market. The DogeCola project’s developers added this feature to prevent the all too common ‘pump and dump’ associated with meme tokens. It was designed to make variable repurchasing and token burns based on the transaction volume every 24 hours. The goal is to keep the price of DogeCola high by burning tokens and reducing supply every time a sale is made with the tokens.

Reflection mechanism: The reflection mechanism means the tokens are self-generating and aim to discourage selling by promoting a ‘hold and earn’ use culture. By implementing a reflective mechanism in the token’s smart contract, all transactions involving tokens are ‘taxed’, and rewards are distributed evenly among holders. The DogeCola team does this to encourage the holding their tokens, and the commission on sales is much higher to prevent whales from dumping and driving the price down

Both the auto-boost and reflection mechanism are underpinned by a buy and sell fee structure: on buying 6% is set aside for the auto-boost function, with 2% going reflection to holders and 4% of marketing. While on sales, 7% is for auto-boost function, 7% for reflection to holders and again, 4% allocated to marketing.

Branded cola drink: The DogeCola team has begun the process of bringing their soft drink brand to the market as soon as possible. In a recent interview the DogeCola project’s lead developer, Chris, confirmed that the primary goal is to have the soft drinks readily available for purchase in stores, within the next three to six months. In the meantime, DogeCola token holders this week snapped up the first 1,000 samples. As Jason McLeod of the community-based #stopelon crypto initiative, commented on Twitter: “I definitely think this is the way crypto will go in the future. For me, it’s all about that link from crypto to ‘everyday’ people in the ‘real’ world.” The DogeCola team also plans to fight plastic pollution caused by corporations like Coca Cola, using a community-led vote to determine which eco-charities to support – enhancing their ‘disruptive’ branding in the process.

 

What the crypto experts think of DogeCola?

At the launch of DogeCola in July, Chris the lead dev and founder proclaimed: “If you like Coca Cola, if you like Dogecoin, then you will love DogeCola.”  While the meme coin has risen in price by 556.1% from listing on CoinGecko to its all-time high, with the current price 500% from the listing price, its already has some push back from within its 10K strong international Telegram community. “Please know that you are in a project with a team that many times literally does not sleep in 72 hours; please do not look at x minutes candles in DogeCola; try to be patient, intelligent, trust the process and stick to your guts and vision,” said @Freejo1 in response to such jitters.

Jason Suttie, CMO of Bumper, a new protocol designed to protect the value of your crypto says: “What I find most exciting about projects like DogeCola is the visibility it’s bringing to the crypto space from the general public. Everybody knows Cola, many non-crypto people have now heard about Dogecoin. DogeCola creates a connection between a physical and virtual object which starts to make crypto less scary for the uninitiated. It’s through clever projects like this that crypto will make big steps toward mass adoption.”

Chairman of BigONE, Anndy Lian, says he believes that DogeCola being based on a reflective token mechanism and with a real-world use has a clear advantage in the crypto marketplace: “We are excited to list DogeCola on the BigONE exchange because it’s ticked all the boxes – a smart reflective token mechanism, branded cola drink, a great development team with passionate community behind it.” Certainly, this is supported by news that the team has succeeded in reaching 20k token holders just a couple of days after their CoinMarketCap airdrop on August 27th. And with a DogeCola sponsored NSCAR driver due to be announced shortly to further promote growth, this reflective token is surely one to watch out for.

Source: https://www.mid-day.com/lifestyle/infotainment/article/why-dogecola-is-the-reflective-token-to-watch-23191206

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j