ERC-404 market slumps amidst reported impact on Ethereum gas prices.
The latest and hottest crypto market segment, ERC-404, faced a significant drop in overall market cap and traction amidst backlash for reportedly spiking Ethereum gas fees. ERC-404 is a new but unofficial experimental token standard on Ethereum. Pandora, one of the new tokens using the standard, spiked a crazy trend last week and rallied +200% as per CoinMarketCap.
However, the trend reportedly tipped Ethereum gas fees to spike to new heights last seen in 2023. On February 9, the average transaction cost on Ethereum hit 70 gwei – over $60. On the same day, the peak costs reached 377 gwei – drawing parallels to May 12, 2023 levels.
Photo: Etherscan
Although the spike highlights one of the problems (gas fees) that L2 solutions are trying to solve, the new ERC-404 standard was marked as the culprit for the recent gas spike.
Pop Chunk, an anonymous gas auditor on X, reportedly faulted the new standard for the ridiculous Ethereum gas prices. He claimed the ERC-404 transfer was 3X more costly than the normal ERC-721A.
For perspective, ERC-404 aims to bring more functionality to ERC-721 NFTs (non-fungible tokens), by binding them to ERC-20. This approach ensures a divisible NFT (DN) that can be fractionally owned by multiple wallets. Besides, each wallet can trade or stake its portion for loans. It’s more like fractional shares/stocks in traditional finance.
Ctrl, one of the ERC-404-based Pandora developers, told Cointelegraph that they were working on drastically “lowering” the gas fees. However, Pop Chunk maintained that the new token standard needed optimization to mitigate its gas fee effect on Ethereum.
But, over the weekend (11 Feb), Ctrl and Pop Chunk were embroiled in a supremacy battle on the ERC-404, forcing the latter to create what he termed as “Divisional NFT – DN404”. Pop Chunk implored Pandora that they could build on top of the code for a better experience.
ERC-404 Market Slumps Double-digit in a Short Span
At press time, details on DN404 weren’t out yet, and there were no projects using it either. However, the ERC-404 market segment witnessed a meltdown as the market cap dipped 29.5% in the past 24 hours, according to CoinGecko.
Prices of leading ERC-404 tokens, e.g., Pandora (PANDORA), DeFrogs (DEFROGS), and Rug (RUG), dropped by over 20% in the past 24 hours before press time.
The reported impact of Ethereum gas fees from the recent craze on ERC-404 could affect the standard’s future and the current projects linked to it, like Pandora. However, it remains to be seen if Ethereum community members will adopt it as an EIP (Ethereum Improvement Proposal).