Pandora has achieved the fragmentation of NFTs in the form of ERC404, and its mechanism is quite innovative.
Author: Blockchain Research Institute of First Warehouse
*This article was first published on February 5th
Simplified Interpretation
Pandora is an NFT fragmentation project launched on February 2nd, with its core technology being the ERC404 token standard. Users can purchase the project's token PANDORA on Uniswap V3 to obtain ERC404 tokens, which is equivalent to fragmented ownership of its NFT—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.
Fundamental Overview
Team: Pandora is developed by an anonymous team, and the number of team members is unknown. Currently, public information shows three developers: Acme, ctrl, and Searn. Acme is the GitHub operator of the Pandora project, and based on his social media accounts, he is an engineer at Coinbase. Another developer, known as ctrl, is one of the investors in Syndicate and operates his own Web3 community. There is limited public information available about the third developer, Searn.
Funding: The Pandora project has not disclosed its financing information.
Business Mechanism
Fragmentation Mechanism
Pandora is a project for NFT fragmentation, with its core being the ERC404 token standard, an experimental token standard that falls between ERC20 and ERC721. ERC404 tokens can be traded on platforms such as Uniswap, similar to fungible tokens. At the same time, 1 ERC404 token can correspond to 1 NFT (referred to as Replicant NFT). The mathematical relationship between them is as follows:
nReplicant NFT = [nERC404]
Where nReplicant NFT represents the quantity of Replicant NFT, nERC404 represents the quantity of ERC404 tokens, and [n] denotes the largest integer not greater than that number.
In simple terms, having a whole token is equivalent to owning an NFT. For example, if a user holds 0.5 tokens, they own 0 NFTs; if they hold 1 token, they own 1 NFT; if they hold 1.5 tokens, they own 1 NFT; if they hold 2 tokens, they own 2 NFTs; if they hold 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 use ETH and other tokens to exchange for PANDORA tokens on Uniswap V3, and holding PANDORA tokens is equivalent to fragmented ownership of Pandora's NFT (Pandora Replicants), with the quantity of tokens determining the number of NFTs owned by the user.
Through the ERC404 standard, Pandora has achieved a similar effect to NFT fragmentation. When users are interested in a particular NFT series, they can choose to hold a certain amount of tokens instead of complete NFTs, providing more flexibility in capital allocation and reducing the threshold for participating in NFT investments.
NFT Burning and Recasting Mechanism
However, Replicant NFTs are different from common ERC721 format NFTs, as they have a mechanism for burning and recasting, which is triggered when users perform operations such as transferring or trading ERC404. As mentioned earlier, whole ERC404 tokens are bound to Replicant NFTs, so when ERC404 tokens change, Replicant NFTs also change. There are two scenarios:
1) When users sell ERC404 tokens, the Replicant NFTs in their wallets will be burned (destroyed).
2) When users transfer, the Replicant NFTs in the sender's wallet will be burned, and then new Replicant NFTs will be recast in the receiver's wallet.
Each recasting will refresh the characteristics of the Replicant NFT, and the 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 one they like. If a user does not want to change their Replicant NFT (i.e., not burn and recast it) but wants 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 perform operations on the ERC404 token; if they do not want the Replicant NFT to change, they perform operations on the Replicant NFT.
Pandora Replicants
Pandora Replicants are the Replicant NFTs of the Pandora project, represented by five different colored boxes, with each color indicating a different level of rarity. The specific quantity for each level of rarity has not been publicly disclosed by the official, but the rarity order from high to low is: red, orange, purple, blue, green. New NFTs may be released from the boxes in the future.
Business Data
Pandora was launched on February 2nd, with the current price of PANDORA at $2,375.76 and a 24-hour trading volume of $5.365 million.
Figure 1 PANDORA price, Source: DEX Screener
Currently, the floor price of 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 publicly disclosed its economic model, but it can be seen that both the PANDORA token and Pandora Replicants have a total supply of 10,000. Currently, there are approximately 5,000 tokens in circulation, with the team purchasing 5,000 tokens from the market in the early stages for project operation team rewards, etc. Additionally, the team has retained 700 tokens for linear release using Sablier, to be released within one month. On the first day of launch, the team used approximately 400 ETH to repurchase tokens, mainly because they had distributed liquidity at different price levels on Uniswap V3 and needed to adjust their LP after price changes.
Comprehensive Evaluation
Pandora has achieved the fragmentation of NFTs in the form of ERC404, and its mechanism is quite innovative.
The ERC404 token also provides good liquidity for NFTs, as users can directly sell ERC404 tokens on DEX without waiting for buyers in the NFT trading market.
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