This proposal outlines a standard for hybrid fungible and Non-fungible tokens, integrating smart contract interfaces that are compatible with the [ERC-20] token standard. It synthesizes concepts from [ERC-721] and [ERC-1155]] with influences from the Semi-Fungible Token model of ERC-3525, introducing an innovative approach to manage both ERC-20 and ERC-721 or ERC-20 and ERC-1155 within a single contract.
The motivation behind this EIP is to address the limitations of current token standards by combining the best aspects of ERC-20 and ERC-721, enhancing liquidity, and simplifying the control over token fractionalization and reassembly. This hybrid approach seeks to streamline the integration of DeFi and NFT utilities, leveraging existing infrastructure for faster adoption and minimal disruption to current applications.
The so-called "ERC404 was developed by pseudonymous creators “ctrl” and “Acme,” ERC-404 is an experimental token standard and an innovative approach that combines the features of [ERC-20 tokens] (fungible, divisible like money) and [ERC-721 tokens](non-fungible, unique like NFTs). It introduces the concept of [“semi-fungible” tokens] allowing individuals to own fractions of a single NFT.
This unlocks exciting possibilities for [fractional ownership] of valuable digital assets or real estate, increased liquidity for NFTs, and novel [DeFi applications]. Imagine owning a piece of a rare digital masterpiece in the form of a [fractional NFT]—ERC-404 makes it possible, opening doors to fractional ownership, enhanced NFT liquidity, and groundbreaking DeFi applications.
This hybrid functionality aims to provide versatility, native liquidity, and programmable scarcity to digital assets on the Ethereum blockchain​. The ERC-404 standard, although unofficial and experimental, facilitates fractional ownership of NFTs, opening up new avenues for experimentation and trading in the NFT space. It allows for a unique blend of fungibility and non-fungibility within a single token standard, offering the potential for innovative applications and utility in digital asset management and trading​.
Our goal is to formalize the standard of EIP404 to improve the efficiency and security of future applications in this field.