The inspiration of ERC404, the duality of image and currency, to the blockchain game track (Part 1)

Preface: I haven’t had the urge to write for a long time. With the bull market, everyone is busy getting rich. You have hundreds of thousands of Bome, and he has millions of SLERF. I guess no one will have time to read my long article. In addition, Guatian Lab has written more than 300,000 words of articles on the blockchain game track. Many ideas and opinions have been repeated, and some involve confidentiality clauses. For example, some innovative economic models have been provided to some cooperative projects, so there is less and less content to write, so I just stop.

But this time... it's really different. I've been thinking about it for several days, and the more I think about it, the more excited I get. I'm so excited that I'm going to write down my thoughts and share them with you.

1. What is ERC404

I am not a technical layman, and my understanding is that ERC404 is a type of protocol, similar to the familiar NFT formats ERC721 and ERC1155. The special feature of ERC404 is the "image-to-coin duality", that is, if you own an NFT, you also own a correspondingToken; You put the correspondingTokenTransfer to anotherwallet, then it turns out thatwalletThe NFT in the wallet will be automatically destroyed, and a new NFT will be generated in the new wallet. In other words, NFT cannot be divided, but tokens can be divided, so as long as you buy a small amount and accumulate 1 token, an NFT will be automatically generated in your wallet.

The first ERC404 project was the famous Pandora in early February this year. At that time, the KOLs in the global crypto circle were collectively crazy about Pandora. The price went from a few hundred U at the beginning to a maximum of 30,000 U in six days! Everyone confidently regarded Pandora as the liberator of NFT, and felt that it could lead NFT holders into a new era of bull market, as if once 404 came out, Bored Ape could immediately increase tenfold and re-enter the highlight moment of 100E.

Is ERC404 really so magical? Here I would like to express my personal opinion: ERC404 is indeed magical, and it is even so magical that it may really bring about a new narrative of NFT2.0. However, the magical point is not just the "image-to-coin duality" mentioned in most articles. It can fragment NFTs, allowing players who could not afford the entire NFT to buy NFT fragments. Players who want to buy fragments of encrypted assets can go directly toexchangeIsn’t it better to buy tokens? In addition, the main reason for the decline of avatar NFTs is not that they cannot be fragmented. It is that the old teams have already stopped working (such as Yuga Labs of Bored Ape, I have to criticize this group of unpromising guys), and more importantly, the consensus of avatar NFTs that have no practical utility cannot last long.

So what is the magic of ERC404? Let’s reveal its hidden properties!

2. Hidden Attributes of the Image-Coin Duality

I don’t know which big V came up with the idea of “image-to-coin duality”, but it immediately reminded me of the chilling “wave-particle duality” in high school physics. But behind the flowery expression, I vaguely feltIt is a new existence that can provide the WEB3 world with smoother, more fun and closer to the demands of various stakeholders., the following is explained in several levels:

The first level is what we mentioned before: if the price of an NFT is too high, users can also buy the corresponding fragmented tokens.It does increase the smoothness of asset liquidity.

The second level,404 itself contains the gameplay of the game, so any project that adopts it, even if it is not a blockchain game, can allow users to play it, and playing it will bring more trading opportunities!For example, Pandora directly uses the "blind box opening" mechanism that is popular among gamers. As long as 1 Pandora token is transferred in the wallet, a new box NFT is randomly generated in the new wallet. This NFT is divided into five levels: "red, orange, purple, blue, and green". The probability of the highest level red box appearing is only about 5%. What about the power of the box? We don't know now, to keep it mysterious! Some players keep transferring tokens between their wallet addresses in order to get the scarce box. Who is happy?

The first group of happy people are public chains and miners. The gas fee is very high! Don’t forget who is the first wave of promoters of the inscription track, that is, the miners. You guys are rolling up the inscriptions, and the miners are collecting gas until their hands are tired.

The second group of happy people are the project owners who adopted the 404 protocol! Originally, everyone is worried about the increasing number of user wallet addresses (UAW). The 404 mechanism allows players to automatically contribute their own multiple wallet addresses. In an era where UAW is the highest KPI assessment, shouldn’t project owners embrace 404 with open arms?

The third group of happy people,exchange们，原来用户买卖 token 就是一个目的，为了 token 的涨价，现在 404 的 token 还有多了一个特性，也许能开出稀有的盒子！这会使得 token 的交易更加活跃，哪一个交易所能拒绝天生自带交易活跃性 buff 的新 token 呢？

At the third level, we will further study the model mechanism under 404. Let's take Pandora as an example. What will happen if the price of the token rises? Users feel that 1 token is too expensive, so they only buy 0.5 tokens. Well, NFT enters a deflationary state, because only a wallet address holding 1 complete token can generate 1 NFT. This is why there are only 5,000-6,000 Pandora boxes in the NFT trading market, with a total of 10,000.The price of coins keeps rising, but the number of NFTs keeps decreasing. In a bull market, this reverse deflation mechanism is the most likely to cause FOMO emotions. The most well-known example is the BTC halving., and the Bitcoin halving was coded by Satoshi Nakamoto and stipulated to happen every four years. Everyone thinks that things are more valuable because they are scarce, so the price of BTC rises. Pandora uses a mechanism to automatically adjust, and I have to say that the design is really awesome.

What will happen if the price of the currency drops? That is, the difficulty of holding 1 token will decrease, and the number of NFTs will rise again, at most returning to the state of "one flower, one world, one picture, one token": 10,000 VS 10,000. However, there will definitely be fewer high-level boxes from MINT in the future, because some diamond players will keep the red boxes in their hands and not give them out. As a result, a specific sense of belonging to the community will emerge. Everyone is a red box, everyone is the chosen one, and they organize various DAO, socialize and play.

The fourth level is community belonging + disguised lock-up of tokens. Having written this far, do you feel something else? That’s right!As the sense of belonging to the community increases, the tokens are soft-locked! If you want to hold a red box, you cannot sell your Pandora tokens, even if it is 0.001. If you sell the red box, it will be gone.If token liquidity is reduced, will the price of the currency be more easily increased?

3. What is the future of ERC404?

Well, after thinking so much and writing so much, someone asked, you are talking after the fact, why didn't you say anything when Pandora just started to rise from a few hundred U in early February this year? I must admit with shame that I was really careless at that time, and I only regarded Pandora as a meme, even though a few friends in the Orca Club kept pressing CX (Pandora,nft Amm Moment
https://x.com/KillerWhalesDAO/status/1755572550275584097?s=20), and was unmoved.

Why do we start studying ERC404 now? Because there are blockchain games that use 404. In the past few days, two projects, Lumiterra and Yuliverse, have started using 404. After studying their new moves, I found that Pandora, which I missed before, seems to be quite good. After further research, I was brainwashed. I feel that in the future, ERC404 can at least replace all the original ERC1155 type NFTs, and it can make users, project owners, and partners very happy to play.Xiaobai NavigationGet up, trade up, Fomo up!

The previous article ends here. In the next article, we will combine several cases to talk about how to implement ERC404 in practice, so that the chain can be played to its full potential.

To be continued

The article comes from the Internet:The inspiration of ERC404, the duality of image and currency, to the blockchain game track (Part 1)

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