coinnounce.com
Just a week after the introduction of ERC-404, a new hybrid token and $NFT standard known as DN404 has emerged, claiming to address the inefficiencies of its predecessor.
Introducing Divisible $NFT (DN404)
Developed by a group of developers, DN404, or Divisible $NFT, aims to improve upon the functionalities of ERC-404 by offering a more efficient and compliant solution. According to one of the developers, cygaar, DN404 seeks to be a hybrid ERC-20/721 token with native fractionalization built-in.
Key Differences and Features
While ERC-404 requires protocols to implement its standard for tokens to function properly, DN404 takes a different approach. It utilizes two contracts: a base ERC-20 and a mirror ERC-721, which are fully compliant with existing protocols. The bulk of trading occurs on the ERC-20 token contract, allowing for seamless fractionalization of NFTs.
Functionality and Safety Concerns
DN404 enables users to trade portions of NFTs without intermediaries, facilitating trading on both $NFT and decentralized exchanges. However, developers caution that the code has not undergone formal auditing, urging users to proceed with caution.
The premise of ERC404 was to create a single contract that can act as both a fungible and non-fungible token.
— cygaar (@0xCygaar) February 12, 2024
However, this can't be done without introducing exploits and breaking standards.
Our approach instead uses two contracts - a "base" ERC20 with a "mirror" ERC721.
Safety and Vulnerability Issues
Concerns about the safety of ERC-404 were raised by DN404 developers, suggesting a vulnerability that could potentially result in the theft of NFTs deposited into improperly configured lending protocols. However, ERC-404 developer "ctrl" dismissed these concerns, attributing the vulnerability to improper use of the standard by other projects.
Conclusion and Future Outlook
As the competition between DN404 and ERC-404 unfolds, developers continue to iterate on these standards to enhance functionality and address safety concerns. With both standards vying for dominance in the hybrid token and $NFT space, the landscape of decentralized finance (DeFi) and $NFT trading is poised for further innovation and evolution.
8/ Now, remember how Pandora uses the max token ID to determine what kind of transfer to execute.
— quit (👀,🦄) (@0xQuit) February 8, 2024
Also remember that depositor 2 has 1*10^18 tokens to available to withdraw.
Let's withdraw some of those tokens. Not all, but just a small fraction...like maybe 38,916 of them. pic.twitter.com/iffHJEDyS0