While the Pandora team describes ERC-404 as a “Frankenstein’s monster,” it claims there’s method in its madness.
It was around 9 AM in Toronto, Canada, on Feb. 1 when a designer and crypto trader who goes by ctrl on X — his real name is Arya Khalaj — thought he had stumbled onto something brilliant.
At the end of it, they had built a working implementation of a token standard that combines ERC-20 tokens and NFTs. They called it ERC-404, named after the common website error message. The core idea is that it allows people to buy and sell NFTs, as well as parts of an NFT, where the parts are represented as tokens. Since two halves of a token can be combined to create an NFT, the tokens should, in theory, retain the value of the underlying NFT potential — even when it's temporarily gone. Two half tokens will be worth half of a whole token and NFT combo because they can be combined at will to create the whole token with the corresponding NFT.
Anyone who buys a token will get an NFT — and, if they spend half of that token, the NFT is destroyed. When new NFTs are minted, they are randomized, meaning that the distribution and rarity can change over time. This means users need to be careful they don’t accidentally destroy their own rare NFTs, which could get replaced with more common ones.
In the near term, the team is planning to propose an Ethereum Improvement Proposal — something that, if accepted, would make Ethereum better designed to support this sort of token standard. Hohenheim said the team didn’t want to give a hard timeline but that it’s talking about a number of days, not weeks, before doing so.
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