Experimental Ethereum ERC-404 standard spurs competitor

DN-404 developers aim to solve gas complications inherent in ERC-404 but still regard the effort as a “gimmick” with user demand.

A new, unofficial Ethereum-based cryptocurrency design dubbed ERC-404 emerged on Feb. 2 from a group of pseudonymous developers seeking to combine crypto and NFTs. Pandora, the first token under this standard, surged over 12,000% in less than a week and increased from $250 to over $30,000 before plummeting.

The experimental effort sought to revolutionize fractionalized NFTs and improve liquidity for digital collectibles represented by virtual currencies.

However, ERC-404 arrived with issues primarily around gas optimization, with reports of Ethereum transaction fees skyrocketing the same week as Pandora’s debut. The ERC-404 creators hinted at updates and improvements, but a group of developers launched their iteration to address concerns.

DN-404 versus ERC-404

DN-404 was created to fix inefficiencies with ERC-404 by splitting the token and NFT elements into two separate contracts. Developers said DN-404 also slashes transaction costs by 20%.

The design leverages the ERC-20 token code at its center and a mirror ERC-721 structure for NFT functionality, whereas ERC-404 mixed both sides in a single contract. ERC-404 created a possibility of an NFT being split apart and returning differently from its original state.

Our end goal was to create a token standard that could act as an NFT with native fractionalization built in. This was a unique unlock of ERC-404 that allowed users to trade portions of NFTs without any middleman.

Cygaar, DN-404 developer

One of the pseudonymous developers, Cygaar, emphasized the DN-404 is a standard for protocols to build rather than a project itself. The open-source GitHub repository is in its alpha stage and has not yet been audited.