Ethereum Transaction Costs Skyrocket Amid Rising Excitement for ERC-404

Connor Brooke

Cryptocurrency
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Ethereum Network Gas Fees Reach an Eight-Month High Amid Buzz Over “Semi-Fungible” Tokens and the ERC-404 Standard

Etherscan data indicates a surge in Ethereum gas fees to an eight-month high, fueled by excitement for “semi-fungible” tokens under the newly introduced ERC-404 standard. Gas prices have averaged around 70 gwei ($60 per transaction), with peaks up to 377 gwei, a high last seen on May 12, 2023.

The ERC-404 tokens, debuting on February 5 with the Pandora project’s adoption of this experimental standard, followed by DeFrogs and Monkees, introduce a hybrid of ERC-20 and ERC-721 tokens’ features. This innovation allows for fractional ownership in NFTs, lowering the investment threshold for NFT markets.

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Despite its unofficial status, the ERC-404 standard has propelled a remarkable 6,100% increase in momentum for projects like Pandora, generating over $474 million in trading volume within just a week.

However, the enthusiasm for ERC-404 tokens brings to light concerns over the sustainability of such elevated gas fees, as transactions with these tokens consume more gas than typical NFT or Ethereum transactions, potentially hindering user participation due to increased costs.

The ERC-404 GitHub repository highlights the standard’s experimental nature and the challenges of integrating overlapping standards without a full understanding of their combined functionality.

Critics emphasize the need to balance ERC-404 tokens’ innovative aspects with the Ethereum network’s efficiency and accessibility.

Arya Khalaj (“ctrl”), a core Pandora project developer, mentioned efforts to optimize gas usage, potentially reducing costs by 300% to 400%, emphasizing the importance of gas efficiency for adoption and integration.

The ERC-404 standard is under review for official submission, aiming for a token price mechanism that mirrors real-time floor prices and facilitates genuine liquidity.

Ethereum community discussions are exploring solutions to mitigate high gas fees, including smart contract optimization and layer-2 scaling, to harmonize ERC-404 tokens’ innovation with network accessibility and long-term sustainability.