I haven’t had the urge to write for a long time. The bull market is here and everyone is busy trying to get rich. You have a Bome of hundreds of thousands, and he has a SLERF of millions. If you write a long article, you probably don’t have time to read it. In addition, Guatian Lab has written more than 300,000 words of articles on the blockchain game track. Many ideas and opinions have been discussed over and over again, and some involve confidentiality clauses. For example, some innovative economic models are provided There are some collaborative projects, so there is less and less content to write about, so I might as well stop.
But this time... it's really different. I have been thinking about it for several days, and the more I think about it, the more excited I am. When I get the idea, I will write down my ideas and share them with everyone.
1. What is ERC404?
I am a technical layman, and my understanding is that ERC404 is a protocol type, analogous to the familiar NFT formats ERC721 and ERC1155. The special point of ERC404 is the "coin duality", that is, if you own an NFT, you also own a corresponding token; if you transfer the corresponding token to another wallet, the NFT in the original wallet will be automatically destroyed, and the new NFT will be automatically destroyed. The wallet will generate a new NFT. In other words, NFT cannot be divided, but tokens can be divided, so as long as you accumulate 1 token through a small purchase, an NFT will automatically be generated in your wallet.
The first project of ERC404 was the famous Pandora in early February this year. At that time, KOLs in the global encryption circle went crazy for Pandora. The price went from the initial few hundred U to the highest of 30,000 U in six days! Everyone is confident that Pandora is the liberator of NFT, and feels that it can lead NFT holders into a new era of bull market. It seems that as soon as 404 comes out, Boring Monkey can immediately increase tenfold and return to the highlight moment of 100E.
Is ERC404 really so magical? Let me talk about my personal point of view first: ERC404 is indeed magical, even so magical that it may really trigger a new narrative of NFT2.0, but the magical point is not just the "image-coin duality" mentioned in most articles. "The NFT can be fragmented, so that players who originally couldn't afford the entire NFT can afford NFT fragments. If players want to buy fragmented crypto assets, wouldn’t it be good to go directly to the exchange to buy Tokens? In addition, the main reason for the decline of avatar NFT is not that it cannot be fragmented, but that the old team has long since abandoned the young models and stopped working (for example, Yuga Labs of Boring Ape, if you think of these guys who are not living up to expectations, you have to complain) , and more importantly, the consensus that avatar-type NFTs have no practical utility cannot last long.
So what is the magic point of ERC404? Let’s reveal its hidden properties!
2. The hidden properties of the duality of graphics and coins
"Picture-coin duality" was summed up by someone's brainstorming idea. It immediately reminds people of the chilling "wave-particle duality" in high school physics. But behind its elegant expression, I vaguely feel that it can provide the WEB3 world with a new existence that is smoother, more fun, and closer to the demands of various stakeholders. I will elaborate on it in several levels below:
The first level is what was mentioned before: if the price of an NFT is too high, users can also buy the corresponding fragmented token, which indeed increases the smoothness of asset liquidity.
At the second level, 404 itself accommodates the gameplay of the game, so whichever project adopts it, even if it is not a chain game, can allow users to play, and there will be more trading opportunities when playing! For example, Pandora directly uses the "blind box opening" mechanism that is popular among gamers. As long as one Pandora token is transferred in the wallet, a new box NFT is randomly generated in the new wallet, and this NFT is also divided. There are five levels: red, orange, purple, blue and green. The probability of the highest level red box appearing is only about 5%. What about the empowerment of the box? Don’t know now, keep it a mystery! Some players constantly transfer tokens to their various wallet addresses in order to gain access to scarce boxes. So who is happy?
The first type of happy group, the public chain and the miners, have a lot of gas! Don’t forget who was the first wave of promoters of the Inscription track. They were the miners. If you play Inscription and roll up, the miners will be lenient in collecting gas.
The second type of happy group is the project parties who have adopted the 404 protocol! Originally, everyone is now worried about the increasing number of user wallet addresses (UAW). The 404 mechanism allows players to automatically contribute multiple wallet addresses of their own. In an era where UAW is the highest KPI assessment, project developers Shouldn’t we embrace 404 with open arms?
The third type of happy group, exchanges, originally had one purpose for users to buy and sell tokens. In order to increase the price of tokens, 404 tokens now have an additional feature, and may be able to open rare boxes! This will make the token's transactions more active. Which exchange can refuse a new token that comes with its own trading activity buff?
At the third level, we will discuss the model mechanism under 404 in depth. Let’s take Pandora as an example. What will happen if the price of token rises? Users feel that 1 token is too expensive, so they only buy 0.5 tokens. Come on, NFT has entered a deflationary state, because only the wallet address holding 1 complete token can generate 1 NFT. This is why in the NFT trading market There are currently only 5,000-6,000 Pandora's boxes out of a total of 10,000. As currency prices continue to rise, the number of NFTs continues to decrease. In a bull market scenario, this reverse deflation mechanism is the most likely to cause FOMO sentiment. The most well-known example is the BTC halving, and the Bitcoin halving is Nakamoto. Mr. Cong wrote the code and stipulated that it should be done every four years. Everyone felt that scarcity is more valuable, so the price of BTC rose. Pandora uses a mechanism to automatically adjust, and I have to say that the design is really awesome.
What happens if the currency price drops? That is, the difficulty of holding one token will be reduced, and the number of NFTs will increase again, and at most it will return to the state of "one flower, one world, one picture, one token": 10,000 VS 10,000. It’s just that there will definitely be fewer high-end boxes coming out of MINT later, because some diamonds will stay in the red box after being swiped by them. Therefore, a specific sense of belonging to the community has emerged. Everyone is a red box, and everyone is a red box. The chosen ones organized various DAOs to socialize and play.
The fourth level is a sense of community belonging + disguised lock-up tokens. As I write this, do you feel something? correct! As the sense of belonging to the community increases, the Token is soft locked! If you want to hold a red box, then your Pandora token cannot be sold, even for 0.001. Once you sell the red box, it will be gone. With less Token liquidity, will the currency price be more likely to rise?
3. What is the future of ERC404?
Well, after thinking so much and writing so much, someone asked me, this is an afterthought. Why didn’t you say anything when Pandora was launched from a few hundred users in early February this year? I must be ashamed to admit that I was really careless at the time. I only viewed Pandora as a Meme. Even a few friends from the Orca Club were constantly tapping their heads with CX ("Pandora, nft's amm moment" https: //x.com/KillerWhalesDAO/status/1755572550275584097?s=20), also unmoved.
Why are you starting to study ERC404 now? Because there are blockchain games that use 404, two projects, Lumiterra and Yuliverse, have started to use 404 in the past few days. After studying their new moves, I discovered that Pandora, which I had missed before, seemed to be quite good. After continuing to study, I was brainwashed. I feel that the future of ERC404 can at least replace all the original ERC1155 type NFTs, and can allow users and projects to All parties and partners are very happy to play, trade, and FOMO!
That’s all for the previous article. In the next article, we will combine several cases to talk about how to implement ERC404 in detail, so that it is possible to play the chain and fly~
This article is to be continued.
W Labs other completed long article links:
1. "Revelation of the Economic Model of Chain Games"
https://www.notion.so/wggdao-creators/W-Labs-d4e7a7a2254f4e61a6b217d1ede8b57e?p=4b4aecd126dc4144bb4e7afa768711d0&pm=s
2. "The future path of Gamefi chain game economic model"
https://www.notion.so/wggdao-creators/W-Labs-d4e7a7a2254f4e61a6b217d1ede8b57e?p=4a00654d87ae415fb7cfb564c53493ce&pm=s
3. "The exploration of traditional games entering the blockchain game GameFi"
https://www.notion.so/wggdao-creators/W-Labs-d4e7a7a2254f4e61a6b217d1ede8b57e?p=02253c55d69a4d7aa18d7d5d2cbf0269&pm=s
4. "How to find the next StepN?" ——Start by establishing the X to Earn classification system》
https://www.notion.so/wggdao-creators/W-Labs-d4e7a7a2254f4e61a6b217d1ede8b57e?p=a769ef01e92e4f499d5998609cd714ab&pm=s
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Mirror, an in-depth research article by Guatian Laboratory: https://mirror.xyz/iamwgg.eth
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