ERC404 Tokens Explode on Ethereum, Led by Pandora’s $230 Million Volume
Less than a week since the creation of ERC404, trading volumes on Ethereum are now dominated by these hybrid tokens.
The frenzy has raised concerns about rug pulls and high gas fees.
The Rise of ERC404 Tokens
ERC404 is a token standard on Ethereum that combines characteristics of both cryptocurrencies and NFTs. It greatly improves the liquidity for NFTs, which are typically highly illiquid assets.
The top ERC404 collection, Pandora, has experienced over $230 million in total volume since launching on February 2. The PANDORA/WETH liquidity pool on Uniswap is now the number three pool by volume.
Top Three ERC404 Projects Shake Up Uniswap
The top three ERC404 projects — Pandora, MNRCH, and DeFrogs — have registered a combined $113 million worth of trades over the past 24 hours. This accounts for 12% of Uniswap’s Ethereum trading volume.
Concerns About Rug Pulls and Gas Fees
The frenzied trading around ERC404 tokens has raised concerns about rug pulls and high gas fees on Ethereum. Rug pulls occur when the address that created a token pulls liquidity, leaving investors with nothing.
Frenzy Plus Rug Pulls Equals Trouble
As traders flock to the ERC404 token standard, some have started to take advantage of the frenzy. There have already been a number of rug pulls, leaving investors with losses while the creators walk away with gains.
Rising Gas Costs on Ethereum
ERC404 tokens are also contributing to rising gas costs on Ethereum. Gas fees on Ethereum are payments made by users to send transactions. The popularity of ERC404 tokens has put strain on the Ethereum network, causing gas fees to increase.
The Future of ERC404 Tokens
Despite the concerns surrounding rug pulls and gas fees, the ERC404 token standard shows promise in improving liquidity for NFTs. The founder of the Pandora collection has stated that the next ERC404 improvement should reduce gas costs by 300 to 400%, which will be welcomed by Ethereum mainnet users.
Analyst comment
Positive news: The rise of ERC404 tokens on Ethereum has led to increased liquidity for NFTs and high trading volumes. The top ERC404 collection, Pandora, has experienced over $230 million in total volume since its launch. The top three ERC404 projects have registered $113 million worth of trades in the past 24 hours, accounting for 12% of Uniswap’s trading volume.
Negative news: Concerns have been raised about rug pulls and high gas fees associated with ERC404 tokens. Rug pulls, where liquidity is pulled by creators, have already occurred, resulting in losses for investors. Gas fees on Ethereum have also increased due to the popularity of ERC404 tokens, putting strain on the network.
Neutral news: The future of ERC404 tokens is promising, as they have the potential to improve liquidity for NFTs. The founder of the Pandora collection has plans to reduce gas costs by 300 to 400%, which will benefit Ethereum mainnet users.
