A group of Ethereum application developers recently introduced a new token contract named DN-404 in response to the growing issues associated with the ERC-404 standard. ERC-404, an experimental standard, had gained significant popularity but also led to network congestion and increased fee rates on the ETH platform. DN-404, which stands for “Divisible NFT-404,” is built upon existing token standards ERC-20 and ERC-721, claiming to provide full compliance with these frameworks.
Ethereum devs launch DN-404 token contract
The surge in gas fees, particularly due to the operation of ERC-404 contracts, prompted concerns among users and developers alike. Transactional fees reached as high as $840 for a single transaction on certain projects, far exceeding the usual cost of $50.
This spike in fees, attributed to the adoption and utilization of ERC-404 contracts, has led to transactional costs skyrocketing to eight-month highs since the beginning of February. Gas fees, essential for Ethereum transactions to be processed promptly by network validators, experienced a significant increase, with some transactions costing as much as 360 gwei.
This rise in fees raised doubts about the long-term viability of Ethereum and contributed to a sell-off among popular projects. Despite its widespread adoption, ERC-404 is not officially recognized by the Ethereum Foundation as a token standard. However, several projects embraced the ERC-404 narrative, collectively driving its market capitalization to $209 million within days of its launch.
Critics among Ethereum developers have raised concerns about the naming convention of ERC-404, as it attaches “ERC” to its title without official recognition. Nevertheless, the naming strategy contributed to its popularity and helped garner a following for its intended functionality.
Understanding the challenges and opportunities of ERC-404
ERC-404 introduces the concept of multiple wallets directly owning a single non-fungible token (NFT), potentially enabling tokenization for various use cases such as taking out loans or staking holdings. This blending of tokens and NFT ownership aims to create liquid markets for project tokens and related NFT collections.
In contrast, DN-404 achieves similar objectives by employing two separate contracts to manage user balances and NFTs. As of now, neither DN-404 nor ERC-404 has received official recognition from the Ethereum Foundation. However, they remain freely usable within the Ethereum network.
Developers behind ERC-404 are actively working on an Ethereum Improvement Proposal (EIP) to seek official recognition for the experimental token standard. The EIP process involves introducing new features or functionalities to Ethereum but can be time-consuming.
In efforts to foster transparency and collaboration, developers have reached out to the developer community for feedback and contributions to refine the ERC-404 standard. Additionally, discussions are underway regarding the establishment of a foundation to further develop the standard, drive adoption, and support the rapidly growing ecosystem of builders leveraging this new technology.
The introduction of DN-404 represents an attempt to address the challenges posed by the ERC-404 standard, which led to increased network congestion and transactional fees on the Ethereum platform. While ERC-404 gained significant traction, it also sparked criticism and prompted developers to explore alternative solutions. Moving forward, efforts to refine and standardize these token contracts demonstrate the Ethereum community’s commitment to innovation and scalability.
