Ethereum network gas fees have surged to their highest level in eight months due to the growing interest in a new experimental token standard known as ERC-404. On February 9, gas prices reached a peak of 70 gwei ($60 for a standard transaction), with some peak gas costs going as high as 377 gwei, a level not seen since May 12, 2023.
The surge in gas prices coincided with the increasing excitement surrounding the ERC-404 token standard within the crypto industry. The ERC-404 trend began on February 5 when the Pandora project launched this experimental standard. Since then, it has experienced a staggering increase of over 6,100% and has generated a volume of over $474 million.
The goal of ERC-404 is to connect ERC-721 nonfungible tokens (NFTs) with ERC-20 tokens, allowing for fractionalized ownership of NFTs. This means that multiple wallets can own a portion of a single NFT and use that portion for trading or staking as collateral for loans.
Despite being labeled as an “ERC” token, the name ERC-404 is not officially recognized. Speaking to Cointelegraph on February 9, one of the developers behind the Pandora project, known as “ctrl,” stated that the team is working on significantly reducing gas costs.
According to PopPunk, a pseudonymous co-founder of gas-auditing firm Gaslite, an ERC-404 token requires approximately three times the amount of gas compared to an average NFT transaction.
The spike in network usage on February 9 was mainly driven by increased activity on the decentralized exchange protocol Uniswap. This surge in activity can be attributed to the high trading volumes generated by projects like Pandora, DeFrogs, and other ERC-404 projects, which have collectively generated a trading volume of over $600 million in the past week, according to data from crypto aggregator Birdeye.