TeardownPandora and ERC404 standards

Forward the Original Title:ERC404 behind Pandora’s surge, what chance does it have?

In recent days, a new standard ERC404, which aims to solve NFT liquidity and is between ERC20 and ERC721, has attracted community attention. The price of a single Pandora token, the first token based on this standard, continued to hit a new high, soaring to $5,700. So where does ERC404 come from? What is it? What other opportunities are there?

Pandora and ERC404 Standard Background

Pandora is the first token built based on the ERC404 token standard, an open source experimental token standard for creators and developers alike, and a hybrid ERC20/ERC721 implementation with native liquidity and fragmentation.

Pandora is co-built by @maybectrlfreak (ctrl) and @searnseele (Searn), and the core standard ERC404 was released on Github by @0xacme (Acme), a former software engineer at Coinbase.

1. @maybectrlfreak: Also an angel investor in startup Syndicate. Syndicate’s Twitter Profile page shows that Syndicate’s first tweet was posted on January 22, making early investments in BRC20 and Ordinals trading terminal BeFi Labs. Since then, no other content has been released except content related to BeFi Labs.
2. @searnseele（Searn）
3. @0xacme (Acme): Acme did not mention Pandora in its Twitter profile, however, it published the ERC404 standard on Github (https://github.com/0xacme/ERC404). Acme previously worked at Coinbase.

When talking about the origin of ERC404, we have to mention that the EMERALD contract was previously attacked. According to ctrl, at the time, anyone could transfer and drain funds from any predefined pool. If sent from the pool, the transfer check will be bypassed. This is an obvious flaw in the code and looks like a rug disguised as a vulnerability. In addition, the token transfer logic is very complex, resulting in a mismatch between ERC20 and ERC721 balances. ctrl also lost $30,000 on this, but it believes that the concept is promising and there is a real opportunity for it to exist as a token standard.

Therefore, after discussion, ctrl and Acme provided the EMERALD developer with suggestions for fixing the problem, but the EMERALD developer said that it was not a developer and instead used ChatGPT. During the communication process, the EMERALD developers revealed that they were poor and wanted to quickly launch a rug sequel first. After this, ctrl, Acme and Searn decided to relaunch themselves, which is how Pandora came about.

What is ERC404?

According to the ERC404 standard released by @0xacme, ERC404 attempts to “fuse” some features of the ERC-20 standard and the ERC-721 standard, increasing the liquidity of ERC-721 standard NFTs by combining the token divisibility of the ERC-20 standard. Currently, ERC404 has not been audited and is an experimental test.

However, the ERC404 standard document also points out that the ERC721 implementation here is slightly non-standard. The tokens will be repeatedly destroyed and minted according to the transfer of the underlying/fragmentation. The purpose is to create a system with native fragmentation, liquidity and encourage transactions. Grow NFTs with unique feature sets. That is, if you sell the NFT, you no longer own the tokens, and if you sell the tokens, you no longer own the NFT.

What is Pandora?

Pandora was launched on February 2. It is the first token built based on the ERC404 token standard, and introduces the generation of Avatar NFT “Replicants” bound to the Pandora token and based on ERC404, which can exist up to 10,000 at a given time. Replicants. That is to say, Pandora can be traded on Uniswap or on NFT markets such as OpenSea.

As shown below, there are five rarity levels in the series, distinguished by color. When a user interacts with a Pandora ERC404 token (not a Replicant NFT), the Replicant NFT may be destroyed or subsequently regenerated. Each Pandora token purchased from the liquidity pool generates a new Replicant. When a Pandora ERC404 is sold or transferred, its corresponding Replicant will be destroyed and a new Replicant will be generated at the receiving address. Each time a Replicant NFT is regenerated, the rarity is randomized.

In other words, the rarity level, destruction and regeneration features of Replicant NFT can encourage users to trade on third-party markets outside the liquidity pool, or directly refresh the rarity level through transfers.

When a user interacts with a Pandora ERC404 token (not a Replicant NFT), the Replicant may be destroyed or subsequently regenerated. Each Pandora token purchased from the liquidity pool generates a new Replicant. When a Pandora ERC404 is sold or transferred, its corresponding Replicant will be destroyed and a new Replicant will be generated at the receiving address. Additionally, Pandora will release a feature that allows users to store Replicants so that they are not destroyed or regenerated when transferring Pandora ERC404.

Security-wise, Pandora is not audited. However, this morning, Pandora announced that it has created a new 2/4 multi-sig for its vault, and will later transfer PANDORA, LP ownership, and valuable assets in the vault to further enhance the process of expanding and building practices. safety.four signatoriesAll have clean hardware wallets set up specifically for executing transactions via multi-signature.

In summary, the ERC404 standard can achieve the effect of fragmented NFT ownership. It can not only solve the pain point of low liquidity of NFT, but also further unlock the liquidity of NFT through financial methods such as lending and derivatives, which is worthy of our further observation.

ERC404 Ecology

ANON: ERC-404 inspired NFT token including 350 pieces of art.

Vector Reserve: Provides on-chain yields by leveraging EigenLayer and Superfluid Staked LPD: vETH. vETH generates revenue by leveraging EigenLayer’s Superfluid Stake, which means vETH allows for re-staking of ETH LP.

Early this morning, Pandora announced a strategic partnership with Vector Reserve. Both parties will add their respective tokens to their respective vaults, further promote consistency in ecosystem value, and explore how ERC404 and liquidity expansion derivatives can benefit from each other. new way.

Palette(@iamcfw): The first art collection on the ERC404 standard.

Wasabi Protocol: is an on-chain leverage protocol that supports the innovative ERC404 standard by introducing perpetual trading to Pandora. Wasabi Protocol said that in addition to ERC20 and 721, Wasabi’s composable architecture will be able to support new standards such as ERC404 from day one.

Froggy Friends: NFT project Froggy Friends announced the strategic purchase of a number of PANDORA tokens to strengthen its balance sheet.

In addition, currently, OpenSea, Blur, and LooksRare all support Pandora Replicants.

As always, this article does not represent any investment opinion, DYOR.

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1. This article is reprinted from [Foresight News]，Original title “ERC404 behind Pandora’s surge, what chance does it have?”，Copyright belongs to the original author[Karen]. If there are objections to this reprint, please contact the Gate Learn team, and they will handle it promptly.
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