A few days ago, the trend of ERC-404 tokens exploded within the Ethereum blockchain, leading to an increase in interest in this new digital innovation and at the same time an increase in network gas fees.
Now the prices of these new coins are plummeting, and they are recording double-digit daily losses.
Meanwhile, Ethereum eagerly awaits the Dencun update, which will be completed on March 13th: ETH, in anticipation of these improvements, could soon see new yearly highs.
All the details below.
Ethereum blockchain: the hype for ERC-404 tokens ends immediately
Just 10 days ago, a new token standard was launched within the Ethereum blockchain, namely ERC-404, which immediately caught the attention of enthusiasts with a crazy increase in the prices of these new experimental resources.
The most well-known, as well as the first to have made its debut in this new market niche, is PANDORA, which has grown by 400% in just 3 days of trading.
By itself, the ERC-404 standard represents a mere experiment by the Pandora team, which combines the characteristics of the ERC-721 and ERC-20 standards typical of the Ethereum blockchain, creating a hybrid token between an NFT and a fungible token (a semi-fungible).
The central idea behind this new standard is that when someone owns less than a whole NFT, the NFT disappears and the user only owns a fraction of a token. If they combine enough tokens to obtain a whole one, the NFT is returned to them, only it might be a different NFT.
Over the weekend, after traders flocked to new ERC-404 tokens like PANDORA, DEFROGS, and MONKEES, causing frightening price increases, the first capital outflows were observed.
Since February 9th, PANDORA, the crypto leader of this new trend, has lost over 50% of its value, seeing more than 100 million dollars evaporate.
Even DEFROGS and MONKEES have dropped significantly compared to weekend prices.
The enthusiasm for this novelty was immediately dampened after the news spread of a team of Ethereum blockchain developers who are working on an alternative implementation of ERC-404.
This alternative will be called “Divisible NFT“, abbreviated as DN-404, more performant and definitely much cheaper than the previous one.
Its main developer, known as cygaar, said that the new standard could arrive soon, potentially shifting the focus of the degens.
There are also rumors that the developers of Pandora and those of Divisible NFT have entered into conflict with each other because they are working on similar technology.
For now, it seems that the market has priced in a greater interest in the upcoming novelty, which will significantly lower the fees of the Ethereum blockchain.
According to The Block data, during the past week the 7-day moving average of transaction fees on the network reached $11, after increasing from $4 at the end of January.
Parsec Finance has pointed out on X that this rapid increase in fees is mainly due to ERC-404.
Analysis of ETH price awaiting Dencun: new highs coming
While the prices of ERC-404 tokens suffer from competition from new competitors, ETH consolidates its bullish structure waiting for the long-awaited Dencun update of the Ethereum blockchain, scheduled for March 13th.
This will introduce new functionalities within the network, such as the so-called proto-danksharding, which is a basic version of the scaling solution “sharding”, aimed at compressing the weight of a block by separating data storage, thus managing to lower validation fees.
Dencun is mainly focused on making Ethereum’s layer-2, which represent the most solid trend of the past year for the smart contract blockchain, significantly more scalable and cost-effective.
The ETH crypto at the time of writing the article has a price of $2483, well above the 50 EMA on a weekly time frame.
The currency quotes, after going through a terrible 2022 and a less encouraging first half of 2023 compared to bitcoin, start 2024 with a bang.
Ether aims for $3000 after being rejected at $2700 in conjunction with the approval of the Bitcoin spot ETF on US exchanges.
The bulls need to break the psychological barrier of $2500 as soon as possible, and subsequently the one of $2700 (with a weekly close above) to fuel the hopes of buyers, while the bears try to crack the chart by bringing prices below $2150.
The break of one of the two extremes will determine the price action of the coming weeks, which however tends to rise and register new annual highs.
It is also very important to consider the ETH-BTC chart, for a 360° view of what is happening in the crypto market.
The currency belonging to the Ethereum blockchain is in fact subordinate to Bitcoin, which always and in any case remains the king of this sector.
The moments in which ETH records its best price performances are in fact those in which it outperforms the trend of BTC.
For this reason, identifying possible levels on which the ETH-BTC chart can find new bullish strength is essential to predict an increase in value against the dollar.
In the coming weeks, we could finally see a recovery of ETH on the digital gold, with the threshold of 0.05 sat potentially acting as a shield against further bearish incursions.
If it were to maintain its level by forming a double bottom, ETH-BTC could easily reach 0.06 sat, reversing the short-term trend and pushing for an appreciation of the asset.
In an optimistic context like the one described, in addition to ETH and altcoins, even ERC-404 tokens could benefit from it, with the Ethereum blockchain shining among the many decentralized networks in the crypto landscape.