Generic ERC404s Explained

ERC404 Introduction

ERC404 tokens are an experimental token standard launched on Ethereum Mainnet in early February 2024.

The ERC404 standard combines the fungibility of ERC20 tokens and the uniqueness of ERC721 NFTs, and may be treated similar to either depending on the situation.

If you already know the basics, skip to the Jutsu Implementation of 404 here.

ERC20 Recap

ERC20 is a specification adopted by the Ethereum Foundation for fungible tokens.

The most notable features of an ERC20 are the following:

1. Fungibility/Non-Unique - i.e. one ERC20 token is perfectly exchangeable with another ERC20 token.

2. Divisible/Fractional - i.e. ERC20 tokens typically can be traded in factions of a token. For example, you may choose to sell/buy 0.2 of a ERC20 token.

3. Bulk Transfers or Sale/Purchases - i.e. ERC20 tokens typically can be traded in bulk. For example, you may choose to sell/buy 10000.02 of ERC20 tokens in a single transaction.

ERC721 NFT Recap

ERC721 is a specification adopted by the Ethereum Foundation for NFTs.

The most notable features of an ERC721 are the following:

1. Non-Fungibility/Unique - i.e. every ERC721 token is unique - one ERC721 token is different from another ERC721 token.

2. Non-Fractional/Non-Divisible - i.e. ERC721 tokens cannot be traded in factions. You may only trade/transfer a ERC721 as a whole.

3. Single Transfers or Sale/Purchases - i.e. ERC721 tokens cannot be traded in bulk and may only be traded singularly. If you intend to transfer/trade 3 ERC721s, you would have to do so in 3 different transactions.

ERC404 Overview

ERC404 is a specification for hybrid tokens based on a hybrid of the ERC20 and ERC721 token standard, and envisions a token that combines the divisibility of ERC20 tokens and the uniqueness of ERC721 tokens.

Here are the features of the ERC404:

1. Fungible and (kinda?) Unique - One ERC404 token is perfectly exchangeable with another ERC404 token. However, if you do have a whole ERC404, that token also represents a non-fungible asset. By extension, multiple ERC404 tokens represent a collection of non-fungible assets.

2. Fractional/Divisible - ERC404 tokens can be traded in fractions, and you may trade/transfer any fraction of a ERC404. However, trading ERC404 tokens like so may impact the total number of non-fungible assets that the bag of ERC404 represents.

3. Bulk Transfers or Sale/Purchases - i.e. ERC404 tokens can be traded/transferred in bulk. You may transfer any amount of ERC404s. However, such transfers of ERC404 tokens may impact the total number of non-fungible assets that the bag of ERC404 represents

4. Individual/Single Transfers or Sale/Purchases - i.e. If you wanted to trade/transfer a particular non-fungible asset that your ERC404 collection represents, you may do so individually, and this would reduce your total holding of ERC404 by 1. If you wanted to trade/transfer three particular non-fungible asset, you would have to do so in 3 separate transactions.

This describes a generic ERC404 specification, check out the ERC404 implementation by Jutsu World here.