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ERC-404 Shakes Up NFT Market: Nansen Expert Unveils Opportunities and Risks of New Crypto Tokens

Last Updated February 26, 2024 3:32 PM
Teuta Franjkovic
Last Updated February 26, 2024 3:32 PM

Key Takeaways

  • ERC-404 standard allows trading on DEXs or as NFTs using the same contract, boosting NFT liquidity.
  • Pandora’s community engagement and high trading volume suggest market enthusiasm.
  • Risks include bot manipulation, but opportunities lie in novel projects across NFTs and DeFi.

In an exclusive interview with Product Marketing Manager, Journey Li, from the blockchain analytics platform Nansen, CCN.com explored the burgeoning world of ERC-404 tokens, focusing on the meteoric rise of Pandora and its implications for the cryptocurrency market.

Li offers in-depth insights into the technical innovations behind ERC-404 tokens, their market dynamics, and the future trajectory of these digital assets.

ERC-404 Shakes Up NFT Market with Fractionalized Ownership

CCN: Could you explain the ERC-404 standard and its role in Pandora’s rapid success?

Journey: “ERC404 is an experimental, mixed ERC20 / ERC721 implementation, with native liquidity and fractionalization.” – 0xacme (creator of ERC404)”

“For the first time, ERC404 tokens can be traded on decentralized exchanges (DEXs) like regular ERC20 tokens through liquidity pools, or as whole tokens in NFT format on NFT marketplaces, by using the same contract address. This unique approach eliminates the need for wrapping NFTs or creating separate contracts for fractionalization. It’s also considered a more “authentic” way to boost NFT liquidity compared to platforms like Blur, which rely on strategic airdrop incentives.”

CCN: How does the engagement of Pandora’s community, including the unique owner wallets, influence its market prospects?

Journey: “As of Feb 16, 3:30 PM SGT, there are 6,476 unique Pandora owner wallets with $10+ worth of Pandora, and 1,366 of them own one or more whole tokens worth $16.5K+ at its current price (and tradable in the form of NFTs), while the rest hold smaller amounts in the form of fractional tokens (tradable in the form of ERC20 tokens.)”

Broader Crypto Market Craze for New NFT

CCN: Can you share insights on the transaction dynamics observed with ERC-404 tokens, especially in terms of mint volume?

Journey: “As of Feb 16, 4:30 PM SGT, Pandora has had a total trading volume of 85,916 ETH (~$240M) since its launch on Feb 2. Looking at the data in the last 7 days, half of the top 10 traded NFT collections are ERC404 (or similar) based. Pandora’s trading volume is 4 times higher than that of Pudgy Penguins, the most popular NFT in recent months.”

CCN: How does Pandora’s performance and the significant purchase by a wallet associated with Amber Group reflect broader crypto market trends?

Journey: “This reflects the enthusiasm and optimism surrounding a novel design in crypto assets, introducing a fresh narrative that market participants always look out for.”

New Crypto Tokens: Boon or Bane?

CCN: In your view, what are the risks and opportunities for investors with the emergence of tokens like Pandora?

Journey: “One of the risks for investors is that many of these new tokens are sniped by trading bots. On the flip side, the emergence of hybrid tokens presents new opportunities for investors, including new projects for NFTs, games, DeFi, or even RWAs.”

CCN: How does Nansen approach the analysis of rapidly evolving crypto assets, and what methodologies do you employ?

Journey: “Nansen is the only platform that provides detailed data analytics of both NFTs and tokens. We are always committed to improving our data coverage and accuracy to surface relevant crypto market activities and trends.”

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