In-depth Analysis of ERC404: Is the NFT Pandora's Box or a Liquidity Revolution?

ERC404 is an experimental hybrid of ERC20 and ERC721 technology, featuring native Liquidity and fragmented semi-homogeneous characteristics. It establishes a corresponding conversion relationship between NFTs and FTs through a protocol, and realizes NFTs with transformable built-in attributes.

Unlike the mainstream NFTFi commercial path, the ERC404 asset series cleverly utilizes existing facilities of NFTs and FTs to establish bilateral Liquidity, featuring new characteristics such as "card pulling", "native fragmentation", and "AMM Liquidity". If widely adopted, it may lead to more innovative gameplay in the future, with greater imaginative space and development potential.

Pandora is the first project based on the ERC404 standard, launched on February 2. 10,000 PANDORA ERC20 tokens correspond to 10,000 NFTs generated "Replicants". Pandora can be traded on certain DEXs as well as on NFT markets. The series has five rarity levels, distinguished by color.

The ERC404 standard has some design flaws, such as the uncontrollable destruction of multiple NFTs and high Gas fees. Pandora distinguishes by introducing rarity and encourages users to manually separate the FT in their addresses due to rarity, which can be seen as a way to address some of the flaws of the protocol itself through an economic model.

ERC404 is still in the early stage and has not been long-term validated. It is an experimental standard that has not yet been officially included in the Ethereum EIP proposals. As the first project, Pandora's future development relies more on the continuous operation of the project team.

Recently, there have been some standards similar to ERC404 in the market, such as DN404, ERC1111, ERC2309, ERC404+, etc. These standards each have their own characteristics, and future development may need to pay attention to factors such as the initial launch of the protocol, wealth effects, community atmosphere, and operational strategies.

Looking to the future, the Class 404 standard may give rise to new "blue-chip" NFT series and bring interesting NFT use cases and scenarios. Potential applications include full-chain Gamefi, functional NFTs, or tool NFTs, among others. Programmable variable attributes and native fragmentation provide these NFTs with more complex value empowerment possibilities, and when combined with DeFi facilities, it can achieve full pricing and even increase financialization play.