Developers Create DN-404 Framework to Address Issues with ERC-404
A group of Ethereum application developers has introduced a new token contract, DN-404, in an effort to resolve the problems associated with the experimental standard called ERC-404s. DN-404, short for “Divisible NFT-404,” is built on the existing token standards ERC-20 and ERC-721 and claims to offer full compliance with these frameworks.
The surge in popularity of ERC-404s has led to a spike in transactional fees, with some fees reaching as high as $840 for a transaction that would typically cost $50. Gas fees, which refer to the fees users pay on the Ethereum network to prioritize their transactions, have also soared to eight-month highs. On Tuesday, the average gas fee for swap transactions was $20, compared to $5 at the beginning of the month.
While ERC-404 is not an officially recognized Ethereum token standard, it has gained traction among several projects, resulting in a market capitalization of $209 million in just a few days. The framework allows multiple wallets to directly own a single non-fungible token (NFT) and has the potential to tokenize specific exposures for loans or stake holdings.
DN-404 achieves the same objective as ERC-404 by using two contracts that handle user balances and NFTs differently. Although neither DN-404 nor ERC-404 are officially recognized by the Ethereum Foundation, they can still be freely used within the network.
The developers of ERC-404 are actively working on an Ethereum Improvement Proposal (EIP) to gain official recognition for the experimental token standard. However, the EIP process is not quick and may take some time to complete, according to the developers.
Analyst comment
Neutral news.
As an analyst, the introduction of DN-404 framework is expected to provide a potential solution to the issues associated with ERC-404s. It aims to address network congestion and high fee rates by incorporating existing token standards ERC-20 and ERC-721. However, the market may experience some uncertainty as the recognition of ERC-404 as an official token standard is still in progress.
