Built-In Liquidity From Day One Because ERC-404 tokens behave just like normal ERC-20s, liquidity pools can be set up from the beginning. Want to sell your fractions? Just swap on an AMM dex like usual. No manually finding a buyer or dealing with order books. Additionally, unlike ordinary fractionalized NFTs, ERC-404 can be automatically fractionated into one NFT or an entire collection.
Massive Potential But Major Caveats The promise of smooth, trustless fractionalization is undeniably appealing. However, ERC-404 is still very early and carries risks like bugs, scams, and lack of adoption.
Let's not disregard the fact that the Ethereum developer community has not officially approved the standard, so rug pulls, vulnerabilities, and other issues are quite possible. Moreover, combining two tokens will not return the same NFT, so its value may be variable—this will depend on the specific project. Last but not least, eternal mints, remints, and burns are driving up the price of gas. Today, it reached its maximum in 8 months - $60 for an ordinary transaction in the Ethereum network.
We strongly believe that with refinement, ERC-404 could be huge. We already started to work with
ERC-404 projects. However, in its current state, it's better to keep a close eye on ERC-404 as it develops — only time will tell if it lives up to the lofty vision.