ERC-404 Sector Plunges: Market Capitalization Drops By 29% In 24 Hours
February 12 2024 - 2:00PM
NEWSBTC
Surprisingly, the newly introduced Ethereum (ETH) token standard,
ERC-404, made an impressive debut in the crypto market,
outperforming many other digital assets. However, as Bitcoin
(BTC), the dominant cryptocurrency, began to rally, investors
swiftly shifted their focus to the king of crypto. Consequently,
this shift led to notable price drops and market capitalization
declines across the ERC-404 ecosystem and its associated tokens.
From Skyrocketing Surges To Sharp Corrections According to data
from CoinGecko, the ERC-404 sector has experienced a significant
decline, with an overall market capitalization drop of 29% in the
past 24 hours. Key tokens within this sector, including
PANDORA, DeFrogs, RUG, Froggy Friends, and Crystal, have all
witnessed substantial price decreases. PANDORA, which had garnered
attention and speculation, surged by a staggering 12,000% within a
week. Opening at $250 on February 3, 2024, its value
skyrocketed to over $34,000 per token by February 9, 2024. However,
it dropped by 38% from its all-time high (ATH) in just 24 hours.
Related Reading: Top-Trader Picks Cardano As Bull Market Leader:
Here’s Why On the other hand, Crystal suffered the most significant
losses, with its price plummeting by 28.4% and trading volume
declining by over 35%. These figures indicate a stark decline in
market activity for the token. Currently, Crystal is down more than
51% from its ATH of $792.74, exemplifying the inherent volatility
of the ERC-404 sector. Following closely behind, Froggy Friends
experienced a 16% drop in trading volume and an 81% decrease in
price from its peak of $823. CoinGecko data reveals that
Froggy Friends currently trades at $150 per token. But what are the
ERC-404 token standards? And what is causing the price and market
capitalization to drop? Navigating The ERC-404 Ecosystem Ethereum,
known for its smart contract platform, has been a breeding ground
for various token standards. While ERC-20 and ERC-721 gained
widespread adoption for fungible and non-fungible tokens (NFTs), a
new contender emerged: ERC-404. Named after the popular
website error code “404,” ERC-404 introduces the concept of
“semi-fungibility” to Ethereum. It combines the divisibility of
ERC-20 tokens with the uniqueness of ERC-721 tokens, bridging the
gap between these two types. ERC-404 tokens are associated with
specific NFTs, allowing fractional transfers of linked NFTs. Full
ownership results in minting the linked NFT to the holder’s wallet,
while fractional transfers trigger the burning of the associated
NFT. New NFTs are automatically minted when sufficient fractions
are accumulated to form a complete token. DN-404 Prepares To
Challenge ERC-404’s Dominance? According to a recent report
by The Block, transaction fees increased as ERC-404 tokens gained
traction, prompting developers to work on an alternative
implementation called Divisible NFT (DN-404). This new
standard aims to optimize code and reduce transaction fees,
addressing the rising costs associated with ERC-404 tokens. The
DN-404 implementation is set to be released soon, potentially
alleviating network congestion caused by the influx of ERC-404
tokens. While there were initial discussions between the Pandora
team, the creators of ERC-404, and the developers working on
DN-404, the two groups did not reach an agreement and are not
collaborating, according to the report. This introduces
uncertainty for traders and investors who navigate between
supporting the original ERC-404 or the upcoming DN-404
implementation. Related Reading: Bitcoin Optimism: Analysts Signal
Potential New All-Time High For BTC In 2024 Overall, the
introduction of ERC-404 brought excitement and volatility to the
crypto market. While semi-fungibility and fractional transfers of
linked NFTs hold promise, challenges such as rising transaction
fees and the emergence of DN-404 have impacted the ERC-404
ecosystem. Traders and investors now face the dilemma of
choosing between the original implementation and the upcoming
alternative. As the market evolves, it will be interesting to see
how the ERC-404 sector adapts and whether it can regain stability
and investor confidence. Featured image from Shutterstock, chart
from TradingView.com
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