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What is the ERC404 protocol? Pandora grew more than 100 times in 10 days? !

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CryptoLola
Monks

Pandora, the first project of the ERC404 protocol, is particularly popular these days. After its launch on February 2, its price soared to $33,000, and the current price is $20,800.

ERC404 is a hybrid ERC20 (Fungible Token) and ERC721 (Non-Fungible Token NFT) protocol, that is, NFT and token can be converted into each other, and it is a graphical currency exchange protocol.

ERC404 Pandora protocol

1. What is the ERC404 protocol?

The ERC404 protocol is an experimental, hybrid ERC20/ERC721 implementation with native liquidity and fragmentation.

Simply put, this protocol allows NFTs to be split and exchanged like tokens, and is a token swap agreement.

Just imagine that expensive but illiquid blue chip NFTs like BAYC can also be sharded and traded on traditional CEX exchanges like BN or OK, just as easily and quickly as purchasing tokenized assets like BTC and ETH.

The ERC404 protocol attempts to solve the liquidity problem of NFTs by converting NFTs and tokens into each other, but they can be bought and sold separately at the same time.

NFT becomes a convertible, divisible and homogeneous token, and a certain number of tokens can be synthesized into a designated NFT to obtain the corresponding rights and interests of the NFT.

The ERC404 protocol is a token exchange protocol

2. What is Pandora?

Pandora is the first project built based on the ERC404 token standard. A 10,000 NFT project corresponds to the $10,000 PANDORA ERC20 token. This is an experimental token standard between ERC20 and ERC721.

Pandora ERC404 tokens can be traded on platforms such as Uniswap. A Pandora ERC404 token can correspond to a Pandora NFT (called Replicant NFT), a set of NFTs with images of different colored boxes.

In the Pandora project, its ERC404 token is PANDORA. The total number of PANDORA tokens and Pandora Replicators is equal to 10,000. Its Replicant NFT is Pandora Replicants.

Pandora’s current price is $20,000

Users can first use ETH and other tokens to trade PANDORA tokens on Uniswap V3. User holding of PANDORA tokens is equivalent to holding of Pandora sharded NFTs (Pandora Replicants). The number of tokens held determines what the user owns. The number of NFTs.

Through the ERC404 standard, Pandora achieves the NFT fragmentation effect.

For example, when bullish on a certain series of NFTs, users can choose to hold a certain number of tokens instead of the full NFT, which is more flexible for capital allocation and also lowers the threshold for participation in NFT investment.

pandora price trend

3. Burning and recasting mechanism between NFT and tokens

The replicant NFT is different from the common ERC721 format NFT. Replicant NFT has a burn and recast mechanism, which is triggered when the user performs operations such as a transfer or transaction on ERC404.

The entire ERC404 token will be linked to the Replicant NFT, so when the ERC404 token changes, the Replicant NFT will also change.

1) When a user sells ERC404 tokens, the Replicant NFT in the user’s wallet will be burned (destroyed).

2) When a user transfers money, the Replicant NFT in the sender’s wallet will be burned, and then a new Replicant NFT will be created in the recipient’s wallet.

Each time it is recalled, the characteristics of the Replicant NFT will be updated and the rarity may also change accordingly.

If the user is not satisfied with the available NFT, he can continuously transfer it to refresh the characteristics of the NFT until he gets the NFT he likes.

If a user does not want to modify their Replicant NFT (does not want to burn and remelt it) and wants to sell it or send it to another user, then they can sell the Replicant NFT on OpenSea or send it to another address .

If the user wants Replicant NFT to change, then operate on the ERC404 token; if user does not want Replicant NFT to change, use Replicant NFT.

Pandora NFT

4. Pandora risks and opportunities

Pandora launched on February 2, initially as picture boxes of 5 different colors and rarities, with a minimum price of $300.

After going live, it quickly attracted attention and purchases. On February 9, it rose to 33,000 without prices peaking. The biggest increase was more than 100 times. The current price is above 20,000 US dollars.

Currently, according to data surveyed on the channel, there are over 5,300 Pandora NFTs in the form of NFTs. The remaining parts are distributed across different wallet addresses in the form of tokens, and some of them fluctuate significantly.

Currently, the ERC404 protocol is still in the experimental stage. Some people believe this will bring new liquidity and gameplay innovation to NFT; others cannot see specific applications and think that NFTs or non-empowerment tokens are just memes and have no specific value.

However, the price of Pandora continued to rise and broke out of the circle, causing more people to pay attention to the ERC404 protocol. Some people opted for Pandora first and held onto the currency while waiting to see future developments.

After all, new things develop very quickly, and ten times and zero are both short-term.

The above is just my personal opinion, not investment advice. My name is CryptoLola and I follow the crypto market and web3.

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