Pandora: The First Truly Fractionalized NFT Ownership
Breaking down ERC 404 - the new "ERC" standard
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How important is fractional ownership? Imagine if Bitcoin did not allow for decimal places, thus anyone interested in BTC had to buy one full BTC at least, do you think it would have been able to reach the same level of acceptance today? I think not.
This is why most cryptocurrencies we know today are ERC20 that offers fungibility. But ERC721 are non-fungible tokens (NFTs) and although they offer uniqueness and ownership, they lack native fractionalization, which is hurting the NFT ecosystem.
Here’s another example that we are all too familiar with. Let’s say you bought an NFT from a collection a while back, like a year ago, and when you bought it, it was hot. But right now the project is dead, a very common occurrence for NFT projects. If there are no bids, you will not be able to sell your NFTs at all, and your losses are an astronomical 100%.
What if NFTs could be as fungible and liquid as ERC20 tokens? Instead of listing an NFT and waiting for a buyer, holders can sell the tokens at any time. .
That’s what a project called Emerald was attempting to do by merging ERC20 tokens with NFTs to tackle NFT liquidity issues. However, it was exploited due to the reliance on ChatGPT. Despite this, three pseudonymous developers, ctrl, Acme, and Searn, saw the potential of what the project was trying to achieve, and thus the Pandora team was formed.
Pandora is an NFT collection with a maximum supply of 10,000 tokens, and it uses a new unofficial token standard they created called ERC404. It combines the fungibility of the ERC20 token standards with the uniqueness of the ERC721 token standards. By mixing the two standards, they simplify the relationship between tokens and NFTs, allowing for native features like partial ownership, enhanced liquidity for an NFT collection, and more. The benefits don’t stop there, and extend to many other applications and possibilities.
Note: The ERC404 is a wordplay on the famous 404 ‘not found’ error, sigalling that the ERC404 is not an official standard yet, but the team is working on getting it recognized.
This initiative marks a pivotal moment for crypto as it’s the first time that an NFT is able to easily achieve the liquidity of ERC20 tokens with the uniqueness of ERC721 NFTs. By doing so, Pandora not only addresses the NFT market's liquidity issues but also pioneers the first truly fractionalized NFT ownership where each token is inextricably linked to an NFT. In a sense, the team has opened Pandora’s box, and hopefully, unlike the myth, this time it unleashes a treasure trove of opportunities for NFT ownership and liquidity.
In the following sections, we will explain what ERC404 is, the problems that ERC404 is solving, compare Pandora with existing NFT solutions, explore possible future use cases and risks that Pandora faces, and the prospects of the token.