Pandora, an emerging NFT project, falls below $20,000 as SlowMist raises multiple risks regarding “ERC-404”
The Pandora project and its experimental token standard ERC-404 have successfully driven the fragmentation of NFT narratives and speculative market frenzy. Its price skyrocketed from a low of $250 to $32,799, but began to decline after February 9th. At the time of writing, it has fallen below $20,000 to $19,668, with a decline of over 40%. Yu Xian, the founder of SlowMist, also pointed out several risks in this regard.
(How does the Pandora project use ERC-404 to bring NFT into the Uniswap trading pool?)
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What are Pandora and ERC-404?
Pandora falls below $20,000
SlowMist: Potential risks of ERC-404
What are Pandora and ERC-404?
Previously reported, the Pandora project is based on the experimental token standard ERC-404, proposed by former Coinbase employee 0xacme, in hopes of optimizing the liquidity of NFTs.
In order to enhance the liquidity and composability of encrypted assets (especially NFTs), ERC-404 combines the applications of both ERC-20 and ERC-721. Each token corresponds to an NFT. When a user sells an NFT, the token is automatically transferred, and when a user sells a token, the corresponding NFT is burned until the token is purchased by another user, and the NFT is re-minted.
Pandora utilizes the design of combining NFTs with tokens to successfully drive the fragmentation and liquidity of NFT narratives, with potential future applications full of imagination. For example, it can introduce NFTs into DeFi lending markets, collateralization, and even derivatives, maximizing the liquidity and capital utilization efficiency of NFTs.
Loopify, the founder of Endless Clouds, describes ERC-404 as follows:
ERC-404 is essentially fragmented NFTs, but at the same time, it has the best UI/UX that traders need. That’s what you need to know.
Pandora falls below $20,000
Pandora successfully drove the fragmentation of NFT narratives and market frenzy. OKX and Binance quickly announced support for ERC-404. Its price rose from a low of $250 to $32,799. However, it began to decline after February 9th and has fallen below $20,000 to $19,668 at the time of writing, with a decline of over 40%.
In addition, other developers have also started trying to improve ERC-404 or develop similar competitive token standards.
Pandora officials emphasize the exploration of potential grants and developer incentive frameworks in the future to avoid excessive malicious competition.
SlowMist: Potential risks of ERC-404
Yu Xian, the founder of SlowMist, also pointed out several risks in this regard:
Risk of indiscriminate distribution of NFT rarity: NFT rarity may be indiscriminately distributed to trading counterparts, which may lead to undervaluation of rare NFTs.
Risk of NFT burning: Due to the precision limit of fungible tokens (FTs), when the quantity of FTs is less than an integer, it may accidentally result in the burning of NFTs.
Risk of increased gas fees: It may lead to increased transaction costs.
Market trading disorder: If the contract owner executes revokeOwnership, the subsequent whitelist mechanism will not be able to be updated, which may lead to market disorder.
Yu Xian finally pointed out that the ERC-404 standard is not yet mature, and different project parties may modify it, resulting in unforeseen security risks.
In addition, ERC-404 is not an Ethereum officially recognized token standard. Pandora is still actively formulating Ethereum Improvement Proposals (EIPs), and the process may take some time.
ERC-404
ERC404
Pandora
Further reading
Bitcoin leads the surge, breaking through $46,000, and the top 10 cryptocurrencies are all experiencing a new year’s market boom.
How does the Pandora project use ERC-404 to bring NFT into the Uniswap trading pool?
