Ethereum

when

Pandora

An unofficial and experimental Ethereum standard dubbed “ERC-404” — proposed to become a hybrid of fungible and nonfungible tokens (NFTs) — is “working around the clock” to submit an Ethereum Improvement Proposal (EIP), according to one of its inventors.
Created by pseudonymous developers known as “ctrl” and “Acme” under a project called Pandora, the standard mixes the tech behind <a href="https://cointelegraph.com/explained/erc-20-tokens-explained">ERC-20</a> fungible tokens with ERC-721, which is used for one-of-one tokens — <a href="https://cointelegraph.com/news/nifty-news-samurai-nfts-take-flight-with-japan-airlines-solana-slows-down">such as the NFTs</a> in the Bored Ape Yacht Club (BAYC) collection.
However, despite the moniker, ERC-404 hasn’t been audited, and the “ERC” is in name only.&nbsp;
Speaking to Cointelegraph, ERC-404 developer ctrl said getting an approved EIP is “one of the more bureaucratic things you can do.”
<blockquote data-ct-non-breakable="true">
 “It’s a lengthy process, there’s a lot of politics [...] Usually, the process takes a couple of weeks.”
</blockquote>
Ctrl was tight-lipped on who was working on the proposal, only that they have “had success with this before” and were “in a very good spot” to soon submit an EIP.
ERC-404 aims to bind ERC-721 NFTs to the ERC-20 tokens, allowing for what some have <a href="https://twitter.com/0xcygaar/status/1755710017087717644" target="_blank" rel="noopener nofollow">described</a> as <a href="https://cointelegraph.com/news/fractional-nfts-and-what-they-mean-for-investing-in-real-world-assets">fractionalized NFTs</a>, allowing multiple wallets to each own a portion of a single NFT — such as a BAYC NFT — and use that portion to trade with or stake for loans.
The ERC-404 GitHub <a href="https://github.com/0xacme/ERC404" target="_blank" rel="noopener nofollow">page</a> says the standard is experimental and the two standards it aims to mix “are not designed to be mixed,” but the project aims to fuse them in “as robust a manner as possible while minimizing tradeoffs.”
The disclaimer hasn’t stopped debate over the safety of the project. A Feb. 8 X post from a developer going by “quit” claimed NFTs that use the ERC-404 standard are possibly vulnerable to theft by ERC-404 tokenholders if the NFT was deposited in a lending protocol not correctly configured for ERC-404.
They claimed a wrongly configured protocol may not differentiate between an ERC-404 NFT and ERC-404 tokens, allowing token depositors to <a href="https://cointelegraph.com/news/9gag-ceo-buys-stephen-chow-nft-3155-premium-floor-price">withdraw an NFT</a> they don’t own.
<blockquote class="twitter-tweet">
 9/ You might be able to guess what happens. This is a valid withdrawal amount, because the depositor has a balance much higher than the request. However, Pandora interprets it as an ERC721 transfer, and thus our token depositor is able to steal the NFT from our NFT depositor. <a href="https://t.co/sQwn9828Jp">pic.twitter.com/sQwn9828Jp</a>— quit (,) (@0xQuit) <a href="https://twitter.com/0xQuit/status/1755702904097231284?ref_src=twsrc%5Etfw">February 8, 2024</a>
</blockquote> 
Ctrl brushed off the concerns raised in the post when speaking to Cointelegraph, arguing that quit “made a contract that uses ERC-404 improperly,” and because of that, “there’s a vulnerability.”
<blockquote data-ct-non-breakable="true">
 “That’s like me posting a picture of a car and explaining how I would break into it because the door is unlocked.”
</blockquote>
Crypto wallets from exchanges Binance and OKX have announced support for ERC-404, with ctrl adding that “something would have been exploited already” if quit’s concern was an issue. He said Pandora was auditing a “more mature iteration of the standard which addresses integration.” 
Related: <a href="https://cointelegraph.com/news/ethereum-dencun-upgrade-eyes-mainnet-after-holesky-testnet">Ethereum upgrade aimed at lowering L2 TX costs eyes mainnet deployment</a>
Pandora — the first ERC-404 token launched on Feb. 5 by the project — has seen gains of over 1,850% in four days and a market cap of nearly $293 million, <a href="https://www.coingecko.com/en/coins/pandora" target="_blank" rel="noopener nofollow">according</a> to CoinGecko.
CoinGecko lists 12 other projects that have launched using ERC-404, including a frog-themed copy of the DeGods NFT collection that’s pulled in a market capitalization of nearly $30 million and another which is a collection of ERC-404-based <a href="https://cointelegraph.com/news/investors-are-shelling-out-six-figures-for-pet-rock-nfts">NFT pet rocks</a>.
Magazine: <a href="https://cointelegraph.com/magazine/ethereum-restaking-blockchain-dangerous/">Ethereum restaking — Blockchain innovation or dangerous house of cards?</a>

ERC-404 hybrid NFT tokens in ‘good spot’ for EIP push, says dev

Cointelegraph

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