Ethereum network gas fees reached an eight-month high amid a frenzy of interest for a new, unofficial, experimental token standard dubbed ERC-404.
Ethereum network gas prices reached an average peak of 70 gwei ($60 for a standard transaction) on Feb. 9, with peak gas costs surging as high as 377 gwei — a level not since May 12, 2023.
While the causes of the gas price surge can be attributed to various factors, the spike arrived around the same time as the hype around the ERC-404 token standard began to pick up steam throughout the crypto sector.
The ERC-404 wave was kicked on Feb. 5 when a project called Pandora launched the experimental standard. It has since witnessed more than 6,100% gain and over $474 million in volume.
ERC-404 aims to bind ERC-721 NFTs to the ERC-20 tokens, allowing for what some have described as fractionalized NFTs, allowing multiple wallets to each own a portion of a single nonfungible token (NFT) — such as a BAYC NFT — and use that portion to trade with or stake for loans.
Despite attaching the prefix “ERC” to the new breed of token, the name is very much unofficial. Speaking to Cointelegraph on Feb. 9, one of the developers behind the Pandora project, who goes by the pseudonym “ctrl” said the team was working on “drastically reducing” gas costs.
“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%.”
According to pseudonymous X user PopPunk, the co-founder of gas-auditing firm Gaslite, an ERC 404 token uses approximately three times the amount of gas required for an average NFT transaction.
An average ERC404 transfer is 125,000 gas units.
More than 3x the gas of an average ERC721A transfer.
This is nightmare fuel.
Gaslite could either:
1) build a more optimized (and more compliant version of this standard)
2) ignore it and let it fade into the ether
— Pop Punk (@PopPunkOnChain) February 6, 2024
Most network usage on Feb. 9 arose from a spike in activity on the decentralized exchange protocol Uniswap.
Much of this activity can be traced back to the significant trading volumes generated by Pandora, DeFrogs, and a roster of other ERC404 projects that now tout a combined trading volume of over $600 million in the last 6 days, according to data from crypto aggregator Birdeye.