CoinMarketCap dives into SPL-404, a popular token standard that's shaking up the Solana ecosystem by tweaking NFTs to make them more appealing to a broader market.
If you’re a low-cap coin trader or NFT collector with a keen eye for crypto's emerging trends, you’ve likely heard of SPL-404.
It’s still early days though, and some early support issues are giving the hybrid token standard some unwanted Jekyll & Hide side effects when it comes to trading it.
What Is SPL-404?
Built on Solana's Token22 standard, which allows for dual-purpose tokens, SPL-404 enables the creation of NFTs with an intrinsic fungible token value, with a twist.
The hybridization of Solana tokens is not new and has previously been introduced by other standards such as SPL-20 and SPL-22.
This means that each SPL-404 NFT isn't just a one-of-a-kind digital asset; it also holds a specific number of tokens that can be traded or exchanged. In short, it allows NFTs to be flipped into easy-to-trade tokens, and vice versa. This can be a godsend for traders who have found out the hard way that NFT markets can be very illiquid in periods of market downturn.
- If you own a project’s SPL404 tokens, you can use them to provide liquidity and earn staking or yield farming revenue, or just trade it on a supported decentralized exchange (DEX) or Dapp as you wish.
- However, you can also convert your tokens into the project’s NFTs if you believe it has collectibility or it offers lucrative holder rewards.
- Every time you swap your tokens, you will be charged a small royalty-like fee that in most cases will be allocated to the project treasury or burned in order to reduce token supply.
Can SPL-404 Make NFTs Great Again?
Enter SPL-404.
Who's Behind SPL-404?
How Is SPL-404 Revolutionizing NFTs and DeFi?
Primarily, it's bringing much-needed liquidity to the NFT market. By assigning a token value to each NFT, SPL-404 makes it easier to buy and sell these unique assets, even if there isn't a specific buyer looking for that particular item. This increased liquidity is a game-changer for the NFT space, which has often been hampered by illiquidity and high barriers to entry.
Secondly, it fractionalizes NFT ownership. Collectors can now own a piece of a valuable NFT without having to purchase the entire asset outright. This opens up the market to a wider range of participants, democratizing access to these unique digital items.
Finally, SPL-404 is pushing the boundaries of what's possible with NFTs, introducing innovative features like generative art and re-minting. These elements of randomness and gamification add a whole new layer of excitement and engagement to the NFT experience, keeping collectors and creators alike on their toes. An SPL-404 NFT is not only a unique piece of art, just like traditional NFTs, but comes with the added twist that it can "re-roll" traits to unlock rare and valuable characteristics.
What’s the Downside?
Of course, as with any new technology, there will be challenges and obstacles to overcome.
Regulatory uncertainty, market volatility, scam and hack risks and competition from other emerging standards are all factors that could impact the growth and success of SPL-404.
More pressingly though, SPL-404 tokens are still not widely supported by most DEXs and liquidity providers, and you might encounter a lack of compatibility with Solana’s trading tools like Jupiter, Raydium,Birdeye, and DexScreener. This is something I discovered last week when I bought into a new memecoin project and could only swap a fraction of my tokens until days later when the price had already tanked. Even now, a week after its launch, developers are still scrambling to solve these issues.
Therefore, please be advised to do your homework on any SPL-404 token you want to purchase. Make sure the project and its Solana-2022 format are supported by your marketplace of choice, or it could cost you dearly.
Conclusion
With so much upside thanks to the flexibility and utility it unlocks for both traders and NFT collectors, SPL-404 is definitely worth keeping an eye on. As more projects adopt this standard and new use cases emerge, we can expect to see SPL-404 continue to shape the future of NFTs and DeFi in exciting and unexpected ways. In the interim, just make sure the token you’re eyeing is supported on trading platforms.