Thesis 404

With market attention now primarily on Solana, memes, and BTC flows, I felt it was an excellent time to refine my thesis on the opportunity around 404s. 404s are a catch-all term I am using for semi-fungible proto-token standards that combine tokens and NFTs into a single package. The term is a catch-all for approaches like ERC404, DN404, and ERC20721s.

My Broad 404 Thesis

A new bull market is upon us. Bitcoin is at $69K, rates are still north of 5%, and the BTC ETFs are bringing in a ton of funds, mindshare, and excitement. Despite years of disinterest and bear market conditions, we will probably see a new bull market in NFTs. However, I think old NFTs will underperform the new entrants to the market, namely Bitcoin Inscriptions and 404s. After the initial excitement though, 404 mindshare seems to have dried up. PANDORA itself appears to be trading between a range of $10K and $27K. But, I think the advantages around 404s are such that attention will return to them in a big way.

The tokens of 404s offer many improvements on NFT trading that have been undoable – except by complex fractionalization protocols. However, as semi-fungible tokens, 404s bring a new level of liquidity and speculation to NFTs. Because 404s have tokens, they can potentially tap broader sources of liquidity that could create the following scenario:

  1. Because of their tokens, 404s can trade on AMMs.
  2. AMM trading improves liquidity, price discovery, and UX over NFT auctions.
  3. Improvements lead to more volume.
  4. High volume leads to CEX interest.
  5. Because of their tokens, 404 CEX order book support is easy.
  6. CEX support leads to even deeper liquidity and smoother UX, making 404s more accessible to a larger audience.
  7. Order books and deep liquidity lead to derivatives.

The above seven steps certainly help with NFT price action and speculation. We are already seeing this scenario play out as PANDORA, the first ERC404, is already on Kucoin and Huobi (I expect Coinbase and Binance soon).

However, the 404 approach also increases their composability, although developers will need to do a lot of testing before it can be done safely. But I can easily foresee popular Dapps adding 404 support. Current NFT lending is rudimentary, with low LTVs, high costs, and capital inefficiency. 404s create a more liquid market for NFTs, making NFT collateral, lending, and borrowing more feasible. Lenders will be more willing to take an NFT for collateral if they know there is a liquid market – and with 404s, there can be.


Despite the benefits of ERC404s, however, I think the existing NFT community will resist adopting it for several reasons. First is that there is a large community of people who hold old cycle NFTs. In the fixed pie of the attention economy, they will want new entrants focusing on and buying their NFTs. As such, any new collection will be distrusted/disliked by the existing market.

Secondly, a more significant hurdle for 404s is that they could make existing NFT marketplaces obsolete. Auction trading is sub-optimal, in my opinion. Auctions are bad UX and lead to low liquidity and low volume. The holy grail of NFT trading has been some sort of AMM or order book, but given the nature of NFTs, it’s challenging – 404s, however, change that. Adding a token to an NFT makes adding NFTs to existing AMMs trivially easy. Of course, if people can trade NFTs on Uniswap, why do we need Opensea? I think many market participants realize that and, as such, see 404s as a threat. The fact that 404s make auction markets obsolete – or at least cut into their market share – is probably the most significant hurdle 404s will have to overcome. 404s challenge a lot of big players in the space.


These are just a few of my thoughts on 404s. They are deceptively simple but add a lot to existing NFT tech. I am unsure if Ethereum will be where 404s take off, which collection will win, or which standard will be the most popular. My hunch is PANDORA, as they were the first, and the team seems solid. But there are 404s on Cosmos, Solana, and even Bitcoin.

The broad thesis here is that semi-fungible tokens – tokens paired with NFTs – provide such benefits to NFTs that I think it becomes standard. I expect new 404 collections to do well to the point that older collections begin to bridge this standard.

Disclosure: I hold $PANDORA.

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Great piece! I think as the Solana meme coin frenzy dies down, 404 type tokens will come back to the forefront. And the utility you’re discussing isn’t just for NFTs, it can apply to memecoins as well. One example is $NPC, which runs on ERC 1155 (a precursor to 404). It’s a memecoin but you can actually customize the base NPC meme to your specifications to use as a PFP or even trade on Opensea. I think it opens new possibilities in the memecoin space as  you can now buy memecoins that you can actually use for something.  I suspect we’ll be seeing a lot of these.

Oh thats interesting. I have not heard of $NPC before so would love to look att any link or info you got on it!

You can check out their app that lets you customize the base meme into your PFP or switch between the NFT (‘MFT’ meme fungible token as they call it or semi fungible as others do) and token at
The MFT also gets you access to their game on Nifty Island. I believe they are also going to be airdropping MFTs via Frames on Farcaster but I haven’t seen much on that yet. Sort building an ecosystem around their ERC 1155 token/MFT as you’re suggesting. I think this will be a great new meta. Thx again for the great post.