Ethereum gas fees surge as ERC-404 hype takes flight
Gas prices were recently seen playing at an average of 70 gwei, they last reached this level on May 12, 2023.
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Gas fees on the Ethereum network have soared to an eight-month peak, driven by the hype surrounding “semi-fungible” tokens enabled by the new ERC-404 standard.
According to data from Etherscan, gas prices were recently seen playing at an average of 70 gwei (calculated at $60 per transaction), with some transactions reaching up to 377 gwei. Ethereum gas fees last reached this level on May 12, 2023.
ERC-404 tokens were introduced to the market on February 5 as the Pandora project used the experimental standard. Other projects, such as DeFrogs and Monkees, followed suit.
Token standards serve as formalized rules that govern the functionality of digital assets on networks like Ethereum, dictating how tokens can be transferred and interacted with.
ERC-404 tokens provide a unique solution by merging the properties of ERC-20 tokens with certain aspects of non-fungible ERC-721 tokens. It provides fractional ownership for existing NFTs, effectively creating a lower entry price for NFT investors.
Despite being an unofficial standard, projects like Pandora have helped take ERC-404 to a 6,100% gain momentum, with over $474 million in volume from roughly a week of trading.
The rise of ERC-404 tokens has also sparked concerns regarding the sustainability of such high gas fees. Transactions involving these tokens require more gas than traditional NFT or Ethereum transactions, potentially deterring users due to higher costs.
“This standard is entirely experimental and unaudited, while testing has been conducted in an effort to ensure execution is as accurate as possible. The nature of overlapping standards, however, does imply that integrating protocols will not fully understand their mixed function,” the ERC-404 GitHub repo states.
Critics argue that while ERC-404 tokens present a novel concept, their impact on the Ethereum network’s efficiency and accessibility cannot be overlooked.
“We’re trying to optimize for gas because that’s a big part of adoption and protocols wanting to integrate. So in certain cases, we’re able to potentially reduce gas fees by like 300% to 400%,” shares Arya Khalaj (also known by their pseudonym “ctrl”), a core developer from the Pandora project.
The ERC-404 standard is already slated for submission and review, according to Khalaj. According to ERC-404 developers, the standard aims to have a token price “reflect(s) a floor price in real-time,” given how it allows for “actual native liquidity.”
Discussions within the Ethereum community have focused on potential solutions to mitigate the impact of high gas fees. These include proposals for optimizing smart contract efficiency and exploring layer-2 scaling solutions. Such measures aim to ensure that innovations like ERC-404 tokens can coexist with the broader goals of network accessibility and sustainability.