First-Class Cabin Research Report: Pandora Based on ERC404 Token Standard

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2024-02-06 17:41:56
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Pandora is an NFT fragmentation project launched on February 2, with its core technology being the ERC404 token standard. Users can purchase the project’s namesake token PANDORA on Uniswap V3 to obtain ERC404 tokens, which correspond to fragmented ownership of its NFTs—Pandora Replicants. Additionally, Pandora Replicants can also be purchased directly on OpenSea. Currently, the price of PANDORA is $2,375.76, with a 24-hour trading volume of $5.365 million; the trading volume of Pandora Replicants is 48 ETH.

Introduction to Fundamentals

Team: Pandora is developed by an anonymous team, and the number of team members is unknown. Currently, three developers can be identified from public information: Acme, ctrl, and Searn. Acme is the operator of the Pandora project on GitHub[1], and from his social accounts[2], it appears he is an engineer at Coinbase. Another developer, known as ctrl[3], is one of the investors in Syndicate and runs his own Web3 community. There is less public information available about the developer Searn[4].

Funding: The Pandora project has not disclosed any fundraising information.

Business Mechanism

Fragmentation Mechanism

Pandora is an NFT fragmentation project, with its core being the ERC404 token standard, which is an experimental token standard that lies between ERC20 and ERC721. ERC404 tokens can be traded on platforms like Uniswap, similar to fungible tokens. At the same time, 1 ERC404 token corresponds to 1 NFT (referred to as Replicant NFT). The mathematical relationship between them is as follows:

n~Replicant NFT~= [n~ERC404~]

Where n~Replicant NFT~ represents the number of Replicant NFTs, n~ERC404~ represents the number of ERC404 tokens, and [n] denotes the largest integer not exceeding that number.

In simple terms, accumulating a whole token allows one to hold an NFT. For example, if a user holds 0.5 tokens, they own 0 NFTs; if a user holds 1 token, they own 1 NFT; if a user holds 1.5 tokens, they own 1 NFT; if a user holds 2 tokens, they own 2 NFTs; if a user holds 2.5 tokens, they own 2 NFTs, and so on.

In the Pandora project, its ERC404 token is PANDORA, and its Replicant NFT is Pandora Replicants. Users can first exchange ETH and other tokens for PANDORA tokens on Uniswap V3. Holding PANDORA tokens is equivalent to holding fragmented Pandora NFTs (Pandora Replicants), and the number of tokens held determines the number of NFTs owned by the user.

Through the ERC404 standard, Pandora achieves an effect similar to NFT fragmentation. When users are optimistic about a certain NFT series, they can choose to hold a certain amount of tokens instead of a complete NFT, which provides more flexibility in capital allocation and lowers the investment threshold for participating in NFT investments.

NFT Burning and Recasting Mechanism

However, Replicant NFTs differ from common ERC721 format NFTs, as Replicant NFTs have a burning and recasting mechanism that is triggered when users perform operations such as transferring or trading ERC404. As mentioned earlier, the integer ERC404 tokens are bound to Replicant NFTs, so when ERC404 tokens change, Replicant NFTs will also change. There are two scenarios here:

1) When a user sells ERC404 tokens, the Replicant NFTs in the user's wallet will be burned (destroyed).

2) When a user transfers, the Replicant NFTs in the Sender's wallet will be burned, and new Replicant NFTs will be recast in the Receiver's wallet.

With each recasting, the characteristics of the Replicant NFTs will be refreshed, and their rarity may also change. Therefore, if a user is not satisfied with their NFT, they can continuously transfer it to refresh the NFT until they obtain a desired one. If a user does not want to change their Replicant NFT (does not want to burn and recast) but wishes to sell it or send it to another user, they can sell the Replicant NFT on OpenSea or send it to another address. In simple terms, if a user wants the Replicant NFT to change, they should operate on the ERC404 tokens; if a user does not want the Replicant NFT to change, they should operate on the Replicant NFT.

Pandora Replicants[5]****

Pandora Replicants are the Replicant NFTs of the Pandora project, represented as five different colored boxes, with each color representing a different rarity. The official details of the specific quantities for each rarity have not been disclosed, but the order of rarity from high to low is: red, orange, purple, blue, green. In the future, new NFTs may be opened from the boxes.

Business Data

Pandora launched on February 2, and the current price of PANDORA is $2,375.76, with a 24-hour trading volume of $5.365 million.

Figure 1 PANDORA Price, Source: DEX Screener

Currently, the floor price for Pandora Replicants is 1.2 ETH, with a total trading volume of 48 ETH and 670 holders.

Figure 2 Pandora Replicants Trading Data, Source: OpenSea

Economic Model

Pandora has not disclosed its economic model, but it can be observed that both the PANDORA token and Pandora Replicants have a total supply of 10,000 tokens. Currently, about 5,000 tokens are in circulation, and the team bought back 5,000 tokens from the market at the initial launch for project operation team rewards and similar purposes. Additionally, the team has reserved 700 tokens for linear release using Sablier, to be released within a month. On the first day of launch, the team used approximately 400 ETH to buy back tokens, mainly because they needed to adjust their LP after distributing liquidity at different price levels on Uniswap V3 due to price changes.

Comprehensive Evaluation

  1. Pandora achieves the effect of NFT fragmentation through the ERC404 format, and its mechanism is relatively innovative.

  2. The ERC404 token also provides good liquidity for NFTs, allowing users to sell ERC404 tokens directly on DEX without waiting for buyers in the NFT trading market.

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