ERC404: A New Asset Standard Integrating NFT and FT

ERC404 is an experimental hybrid technical solution that combines ERC20 and ERC721, featuring native liquidity and fragmented semi-fungibility. It establishes a corresponding conversion relationship between NFTs and FTs through a protocol, and enables NFTs with changeable built-in attributes.

Main Features

• Native liquidity: FT can provide liquidity on DEX, automatically generating corresponding NFT.
• Programmability: Different attributes and visual presentations can be assigned based on Token ID.
• Pseudo-random card draw: Users can "draw" different rarities of NFTs through transfers.
• Dual pricing: FT reflects the base price of the series, NFT reflects the rarity premium.

Differences from Traditional NFTs

1. The standard layer achieves fragmentation and native liquidity
2. NFT series internal drawing card logic and interchangeability
3. Clarify the value and pricing power of different attributes of the asset.

Comparison with NFTFi

The ERC404 asset class has significant differences from the mainstream NFTFi business path:

• Establish bilateral liquidity using existing NFT and FT facilities.
• Featuring new characteristics of "card draw", "native fragmentation", and "AMM liquidity"
• There are more innovative gameplay and development potential.

Risk Analysis

• The standard has not been validated over a long period and may have security vulnerabilities.
• Not yet included in the formal EIP proposal
• The initial project Pandora still needs to continue its operations and is at risk of being replaced.

Future Outlook

ERC404 opens up a new direction for the development of NFTs, and the following may emerge in the future:

• New "Blue Chip" NFT Series
• Full-chain GameFi applications
• Complex value empowerment of functional/tool NFTs
• NFT financialization gameplay based on DeFi facilities

The ERC404 standard embodies the innovative vitality of Web3, bringing new possibilities to the NFT ecosystem. However, its development still requires time for validation, and investors should rationally consider the associated risks.