Surprisingly, the newly introduced ethereum (eth), the ERC-404 token standard, made an impressive debut in the cryptocurrency market, outperforming many other digital assets.
However, when bitcoin (btc), the dominant cryptocurrency, began to recover, investors quickly shifted their attention to the king of cryptocurrencies. Consequently, this change led to notable price drops and market capitalization decreases across the ERC-404 ecosystem and its associated tokens.
From dizzying waves to sudden corrections
According data According to CoinGecko, the ERC-404 sector has seen a significant drop, with the overall market capitalization falling by 29% in the last 24 hours.
Key tokens within this sector, including PANDORA, DeFrogs, RUG, Froggy Friends, and Crystal, have seen substantial price drops. PANDORA, which had attracted attention and speculation, rose a staggering 12,000% in one week.
Opening at $250 on February 3, 2024, its value skyrocketed to over $34,000 per token on February 9, 2024. However, it fell 38% from its price. its highest point (ATH) in just 24 hours.
On the other hand, Crystal suffered the largest losses: its price plummeted by 28.4% and its trading volume decreased by more than 35%. These figures indicate a marked drop in market activity for the token. Currently, Crystal is down over 51% from its ATH of $792.74, exemplifying the inherent volatility of the ERC-404 sector.
Following closely behind, Froggy Friends experienced a 16% drop in trading volume and 81% decline in price from its high of $823. CoinGecko data reveals that Froggy Friends is currently trading at $150 per token.
But what are the ERC-404 token standards? And what is causing the price and market cap to drop?
Navigating the ERC-404 ecosystem
ethereum, known for its smart contract platform, has been a breeding ground for several token standards. While ERC-20 and ERC-721 gained widespread adoption for fungible and non-fungible tokens (NFTs), a ethereum-blockchains-path-to-nft-liquidity-and-accessibility-91096bc6faca” target=”_blank” rel=”nofollow”>new contender emerged: ERC-404.
ERC-404, named after the popular website error code “404”, introduces the concept of “semi-fungibility” to ethereum. It combines the divisibility of ERC-20 tokens with the uniqueness of ERC-721 tokens, bridging the gap between these two types.
ERC-404 tokens are associated with specific NFTs, allowing fractional transfers of linked NFTs. Full ownership results in the minting of the linked nft in the holder's wallet, while fractional transfers trigger the burning of the associated nft. New NFTs are automatically minted when enough fractions are accumulated to form a complete token.
Is DN-404 preparing to challenge ERC-404 dominance?
According to a recent report According to The Block, transaction fees increased as ERC-404 tokens gained traction, leading developers to work on an alternative implementation called Divisible nft (DN-404).
This new standard aims to optimize the code and reduce transaction fees, addressing the increasing costs associated with ERC-404 tokens. The DN-404 implementation will be released soon, which could alleviate network congestion caused by the influx of ERC-404 tokens.
While there were initial discussions between the Pandora team, the creators of ERC-404, and developers working on DN-404The two groups did not reach an agreement and are not cooperating, according to the report.
This introduces uncertainty for traders and investors navigating between supporting the original ERC-404 or the upcoming DN-404 implementation.
Overall, the introduction of ERC-404 brought excitement and volatility to the cryptocurrency market. While semi-fungibility and fractional transfers of linked NFTs are promising, challenges such as rising transaction fees and the emergence of DN-404 have impacted the ERC-404 ecosystem.
Traders and investors are now faced with the dilemma of choosing between the original implementation and the next alternative. As the market evolves, it will be interesting to see how the ERC-404 sector adapts and if it can regain stability and investor confidence.
Featured image from Shutterstock, chart from TradingView.com
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