In response to the release of the experimental ERC-404 token standard by the Pandora team on Feb. 2, a group of crypto developers has unveiled their alternative implementation aiming for greater efficiency.
The ERC-404 token standard, hailed for its attempt to merge ERC-20 tokens and NFTs, garnered attention for its native fractionalization feature, allowing NFTs to be divided and recombined at will. However, its implementation led to a surge in Ethereum transaction fees, prompting concerns within the community.
In a bid to address these concerns, the rival group of developers embarked on creating a more streamlined solution, resulting in the launch of DN-404 on Feb. 12. According to their estimates, DN-404 offers a 20% reduction in transaction fee impact compared to its predecessor.
Explaining the rationale behind DN-404, one of the developers, known under the pseudonym cygaar, stated, “The premise of ERC-404 aimed to merge fungible and non-fungible tokens within a single contract. However, this approach posed security risks and threatened to disrupt existing standards.” Instead, DN-404 adopts a bifurcated approach, employing two separate contracts: a base ERC-20 contract and a mirror ER-C721 contract.
By segregating these elements into distinct, conventional contracts, the developers aim to mitigate potential issues. Another pseudonymous developer, quit, elaborated, “The result is a return to conventional functionality. While both ERC-721 and ERC-20 contracts operate independently, they share underlying 404 rails.”
Despite touting DN-404’s efficiency and safety, the developers cautioned that the code remains unaudited and carries inherent risks. Unlike the ERC-404 initiative, they have refrained from introducing their token-NFT hybrid utilizing this code.
“I want to emphasize that, while the development of DN-404 was an enjoyable endeavor, I view ERC-404 more as a novelty than a practical solution. Nonetheless, given the community’s interest in its continued use, we deemed it necessary to offer an implementation that prioritizes efficiency and security,” quit asserted.
As the crypto community grapples with evolving token standards, the introduction of DN-404 represents a concerted effort to address performance concerns while advancing the frontier of decentralized finance.