The Ethereum ecosystem continues to evolve as the years pass by.
One of the most recent innovations in this blockchain niche is the experimental ERC-404 standard standard.
This token standard became a massive success on launch, and investors rushed to bag millions of dollars worth.
However, less than two weeks after launch, Ethereum is now being clogged by exorbitant gas fees, and the ERC-404 market is currently wading through bearish mud.
What does this ERC-404 even mean, why is the Ethereum network suffering because of it, and why has the ERC-404 total market cap declined so severely over the last day?
Let's find out.
ERC 20 and ERC 721 are some of the most popular token standards on the Ethereum network.
If you didn't know, regular tokens like MATIC and AVAX are based on the ERC20 token standard. The whole idea of ERC 20s is that one coin (MATIC, AVAX, etc) is always equal to the other.
ERC 721s, on the other hand, power NFTs, and add "non-fungibility" to the mix.
Non-fungibility in this case, means that one CryptoPunk or Bored Ape NFT wouldn't exactly be equal to another.
The Experimental ERC 404, however, is the newest addition to the fray. It introduces "semi-fungibility" to the mix, allowing NFTs to be broken down into smaller, tradable units.
Imagine a new kind of NFT that can be broken down into several bits, can be bought by several people, and can even be traded independently of each other.
A very interesting explainer can be found here.
This token standard was introduced by the pseudonymous developers, "ctrl" and "Acme", and opens up incredible opportunities for the way we trade, store and even think about NFTs.
The ERC404 craze is doing something to the Ethereum network.
On 9 February, the Ethereum network's gas fees exploded upwards to an eight-month high and even hit an average high of around 70 gwei (or about $60 for a standard transaction).
As shown by the chart above, the max gas fees even hit a staggering 377 gwei, the highest it has been at since 12 May 2023.
Interestingly enough, this rally in gas fees from 1 February until its peak on 9 February, coincided with the introduction and popularity of the ERC 404 token standard.
This also presents a good argument that both of these events may be correlated, as more traders rushed to make the most of the "early bird" access to this new token standard may have flooded the Ethereum network, driving up the gas fees.
When the Pandora project launched on 5 February, the ERC404 craze started in full force.
Since then, the ERC404 market has grown by an astounding 6,100%, amassing a staggering volume of over $400 million.
However, after a week of explosive gain, the ERC404 sector has a correction, and Coingecko data shows that this new niche had a sharp decrease over the last day.
According to the snapshot above, the ERC 404 market has slid downwards, with its entire market cap dropping by 31%, to about $163 million.
Huge tokens in the ERC404 space like PANDORA, DEFROG, and RUG have also dropped by around 29%, 26%, and 31% respectively, showing a massive dump in investor sentiment.
Will the ERC404 market recover, or is this bearishness going to continue for longer?
We spoke to many visionary founders within the blockchain space and encountered groundbreaking developments, notably within the ERC404 realm.
Specifically, Yash Dahekar, the CEO and founder of DODAS, said
They have launched the world's first Multichain ERC404 Indexer with API. This marks a significant milestone in blockchain technology
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.