Merely a week following the introduction of ERC-404, an unofficial Ethereum standard blending fungible and non-fungible token (NFT) functionalities, a new team of developers has presented DN404 as an alternative.
DN404, or “Divisible NFT,” aims to be a hybrid ERC-20/721 token similar to its ERC-404 counterpart. The standard facilitates the trading of fractionalized portions of NFTs among holders, as explained by pseudonymous developer “cygaar” in a post on Feb. 12.
While acknowledging the popularity of ERC-404, cygaar highlighted its perceived shortcomings, including deviation from existing standards, inefficiency, and susceptibility to breaking in certain scenarios.
DN404 utilizes two contracts: a “base” ERC-20 and a “mirror” ERC-721. Transactions primarily occur on the ERC-20 token contract, representing fractions of NFTs. When base ERC-20 tokens are transferred, mirrored NFTs are automatically burned and minted.
The ultimate aim of DN404 is to enable users to trade NFT portions without intermediaries, facilitating trading on both NFT exchanges and decentralized exchanges. However, the developer cautioned that the code has not undergone formal auditing and should be used at the user’s own risk.
Recent concerns emerged regarding a potential vulnerability in ERC-404, suggesting the possibility of ERC-404 token holders exploiting NFTs deposited into lending protocols. However, ERC-404 developer “ctrl” dismissed these concerns, attributing them to improper use of the standard by another developer and asserting ongoing efforts to address integration issues through auditing.
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