Encryption Spring Festival: ERC404 Protocol Sparks New Trend

During the Spring Festival, the encryption circle has once again stirred up a wave of excitement. A new protocol called ERC404 has emerged, attracting widespread attention and discussion in the market. This protocol combines NFTs with ERC20 tokens, achieving high liquidity for NFTs and opening up a new realm of possibilities.

ERC404 Protocol: The Integration of NFTs and Tokens

The core idea of the ERC404 protocol is to associate NFT collections with corresponding token pools. In simple terms, trading NFTs is equivalent to trading tokens, and vice versa. This mechanism cleverly addresses the longstanding liquidity issue that NFTs have faced.

The specific operation method is as follows:

• When the number of tokens in the holding address is less than 1, only hold the tokens.
• When the number of tokens in the holding address reaches or exceeds 1, both NFT and tokens are held.
• When selling a portion of tokens, randomly destroy an NFT.
• Automatically mint an NFT when buying a sufficient amount of tokens.

Numerous土狗projects are emerging

With the rise of the ERC404 protocol, a large number of projects have begun to emerge. Some trading platforms quickly supported this protocol and launched multiple related projects. Among them, Pandora, as the first token of ERC404, once surged to $30,000, and is currently down to over $10,000.

In addition to Pandora, several other small-cap projects such as Defrogs have emerged. Some trading platforms have even announced support for up to 21 ERC404-related projects, demonstrating a high level of attention to this emerging field.

New Attempts in the Gamefi Field

The application of ERC404 quickly extended to the Gamefi field. The EGGX project innovatively links 1 NFT to 10,000 tokens, achieving a 50-fold increase on its first day of launch. Subsequently, various projects incorporating game elements have emerged like mushrooms after rain, including multiple gameplay options such as roulette and poker.

The Dilemma of "Fair Distribution"

In this wave of enthusiasm, some projects have attempted to adopt a "fair distribution" approach, but the results have not been ideal. For example, the Yume project faced difficulties due to an excessive number of issuances, with the minting progress stagnating and even the emergence of rights protection groups. This once again proves that the so-called "fair distribution" is often difficult to truly achieve, and the market still requires organized promotion and maintenance.

The Continuing Influence of Meme Culture

In the ERC404 craze, meme culture continues to play an important role. For example, a project named 9527, although it does not strictly belong to ERC404, has still achieved significant growth due to its unique cultural attributes and community foundation.

Potential Popularity of ERC404 Model

The success of ERC404 has led to the emergence of more similar protocols, such as ERC1111 and 505 on the BSC chain. This model of linking assets with liquidity is expected to be applied in a broader blockchain ecosystem, including the highly anticipated Bitcoin ecosystem.

Conclusion

The emergence of the ERC404 protocol has brought new possibilities to the NFT and token market. It not only enhances the liquidity of NFTs but also provides new ideas for project parties and investors. However, like all emerging technologies, ERC404 also faces challenges and risks. Market participants need to remain rational and carefully assess the potential and risks of each project.

With the continuous development of technology and the gradual maturation of the market, we have reason to expect more innovations and quality projects in the encryption ecosystem. In this rapidly changing field, it is crucial to maintain an open and learning attitude.