Pandora suffered 40% blood loss in two days! What is the ERC-404 protocol? What are the risks?

The Pandora protocol has attracted much attention in the NFT market recently. On New Year's Eve, its price once reached $32,000, setting an astonishing increase of more than 420%. However, prices have been on a choppy decline since then. According to DEXScreener data, as of now, the price has dropped to $19,174, with up to 40% of its value evaporated.

Remind Pandora that the market fluctuates greatly, so readers must be cautious.

What is ERC-404 proposed by Pandora?

The Pandora protocol became popular because it proposed a new unofficial token standard "ERC-404".

According to the official introduction, the ERC-404 protocol is a new mechanism that bidirectionally connects NFT and Ethereum Token. Purchasing Pandora tokens will mint NFTs in the wallet, while selling tokens will automatically burn the corresponding NFTs.

Pandora’s goal is to combine the ERC-20 token standard and the ERC-721 token standard to solve the problem of insufficient NFT liquidity and create more convenient applications.

Slow Mist: ERC-404 is not yet mature

However, Slow Mist founder Yu Xianggong warned about the mechanism and potential security risks of the new unofficial token standard ERC-404.

Cosine pointed out that during the transaction process of ERC-404 tokens, their associated NFTs may be transferred or destroyed indiscriminately, especially when the number of tokens is slightly lower than an integer due to transaction changes, the corresponding NFTs can be burned.

He also mentioned that because Ethereum transactions consume Gas (gas fees), ERC-404 introduces a whitelist mechanism that allows certain counterparties or routers to process NFTs without frequently processing FT transactions. , to reduce complexity and risk.

Cosine warned that since ERC-404 is not yet a mature standard, implementation differences between different projects may lead to security issues. His analysis highlights the possible unintended consequences of such a token mechanism, especially when it comes to security.

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