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ERC-404 Tokens Struggle as Ordinals Surge

Last Updated March 11, 2024 1:16 PM
Shraddha Sharma
Last Updated March 11, 2024 1:16 PM
By Shraddha Sharma
Verified by Peter Henn

Key Takeaways

  • ERC-404’s attempt to merge different token standards spiked Ethereum gas fees in February.
  • In March, Bitcoin Ordinals showed a resurgence increasing transaction fees on the network.
  • The NFT market showed an appetite for innovation with the newly launched ERC-404 but what changed?

The experimental launch of the Ethereum-based ERC-404 standard saw investor interest in February, as rising gas fees made evident. The steam has cooled down, now Bitcoin Ordinals are gaining interest again. BTC transaction fees hit a monthly high in March, with Bitcoin also hitting a fresh all-time high.

ERC-404 Frenzy Cools Down

ERC-404, which launched in February, combined the features of two well-known standards, ERC20 and ERC721. The experimental standard allowed different types of tokens to interact and also hiked the Ethereum network’s gas fees amid user frenzy.

ERC-404 introduced something called pathing, a method that tries to ensure these fundamentally different tokens can coexist and be exchanged. However, it came with its challenges of how these tokens operate together.

The market’s response to ERC-404 tokens has cooled down since February. Some of the top ERC-404 tokens by market capitalization, such as Pandora, Asterix Labs, and DeFrogs, have lost market capitalization in the seven days to March 11. For instance, Pandora has a market cap of around $192 million with a trading volume of $22 million based on CoinMarketCap data . After high investor interest, Pandora has lost 13% in the run-up to the week at the time of writing (March 11 2024).

Ethereum Gas Fees Fall
Ethereum Gas Fees Fall | Source: Etherscan

Asterix Labs lost about 7% value while DeFrogs lost 30% at the time of writing. Other major names also showed weakness.

Previously, Etherscan data revealed that gas  fees hit a multi-month high for the first time since May 2023. In March, the levels are seemingly coming down as Bitcoin Ordinals took back investor interest.

The Resurgence of Bitcoin Ordinals

Bitcoin Ordinals, which allows for the assignment of unique identifiers to individual satoshis, the smallest unit of Bitcoin, have seen a dramatic increase in activity once again. This protocol makes it possible to attach extra data to Bitcoin transactions, effectively turning each satoshi into a potentially unique digital asset or collectible.

The surge in Ordinals transactions has led to a significant increase in Bitcoin transaction fees as per IntoTheBlock  data. The increased fees signal a growing interest as it hit a monthly high by hiking over 100%.

Based on CryptoSlam data , Ordinals sales volume in March so far has surpassed $231m with 122,835 transactions. However, on the weekly charts, sales volumes have been around 33% down.

Ordinals Rose With BTC Price

While ERC-404 tried an experiment in blending different types of digital assets, Ordinals showcases the potential for innovation within the confines of the already established Bitcoin network since January 2023.

Since the ERC-404 was unaudited, the mixed function could become unsustainable. Ordinals strength also comes amid a price rise as Bitcoin surpassed the $71,000 level for the first time.

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