Deep Dive into ERC-404: How Unique and Polkadot Redefine Refungible Tokens

Is it ground-breaking, or a myth? We’ve seen a lot of new standards break the waves, but one that is catching everyone’s eye is the ERC-404 token standard on Ethereum. What does it mean, and how does it stack up compared to other blockchains? In this article, we’ll explore the ERC-404 contract, its advantages and disadvantages, and one of its key features: Fractionalized Tokens.

What is ERC-404?

ERC-404 is a token standard for smart contracts on the Ethereum blockchain. It allows for the creation of tokens that can be traded, sold, or given away, essentially serving as a type of digital asset. It is often referred to as the “Hybrid Token Standard”, combining both ERC-20 and ERC-721 token standards into a single transaction/functionality. This provides native liquidity, and fractionalization and empowers users to generate both a token and an NFT.

It should be noted, that as of the 9th of April ( the latest source we know of), ERC-404 is not currently part of the official EIP (Ethereum Improvement Proposal) and has not been audited. Readers should take caution and always do research (DYOR).

How do Refungible Tokens Work?

Refungible Tokens (RFTs) represent a new concept in the digital asset space and, because of its innovative proposition, we can see new and unique case studies open up in the realm of Non-Fungible Tokens. These NFTs can be broken up into multiple parts, and allow individual users to collectively own a part of the base (original) NFT.

We can also compare this to how Unique Network’s Refungible tokens (RFTs) work, enabling users to fractionalize their NFTs, and providing an opportunity for shared ownership.

Below is a comparison between various Ethereum Standards:

Exploring Advanced NFTs on Unique Network and Polkadot

Unique Network is pioneering the development of NFTs on Polkadot, standing as the first NFT project on Polkadot since its creation 5 years ago. It has introduced advanced NFT capabilities and the Unique NFT Pallet, establishing a new standard for NFT innovation.

The Unique NFT Pallet is the core of NFT functionality, living on the Polkadot blockchain. Similar to the ERC-721 token standard and the ERC-404 standard on Ethereum, the Unique NFT pallet provides the base for creating NFT collections, minting and managing NFTs of a given collection, including RFTs.

One of Unique’s core NFT functionality stems from the opportunities Advanced NFTs have to offer. Advanced NFTs are different NFT formats and provide varying functionality depending on the use case. Advanced NFTs showcase the power of efficiently fast-minting NFTs, enabling developers to leverage this technology for their purpose-built projects and use cases.

Advanced NFTs include:

1. Customizable NFTs
2. Composable NFTs
3. Multi-Resource NFTs
4. Dynamic NFTs
5. Fractional NFTs
6. Nested NFTs

Unique’s Refungible Tokens

Unique Network introduces a Refungible Token format, enabling users to fractionalize their tokens, providing an opportunity for shared ownership and utility, similar to the ERC-404 token standard. Not only do Refungible Tokens on Unique democratize ownership, but these types of NFTs make it more accessible to everyone by proving to be cost-effective and easy to create and mass-distribute.

Let’s take a mint of 10,000 Refungible NFTs as an example:

In a recent collaboration with Meta Carbon, we explore certified climate Refungible NFTs, empowering people to take steps to be more environmentally and eco-friendly. These NFTs are a prime example of how Refungible NFTs can be monetised and leveraged to their full potential.

Other use cases for Refungible Tokens include:

• Digital art sharing;
• Real estate;
• In-game collectable items and;
• Loyalty programs and subscriptions.

Explore a quick comparison table of Unique’s Refungible and Nested NFTs alongside ERC-404’s Fractional NFTs:

There are important risk factors to consider, sparking conversations about the overall safety of the ERC-404 standard. Polkadot’s layer 0 separates the security from the infrastructure and addresses these risks effectively. Some of the potential risks and overlooked issues with ERC-404 include:

Conclusion

ERC-404’s token standard has been on the radar for many NFT enthusiasts, and we recognise the need for more advanced NFT use cases in the ecosystem. As we continue to develop NFT capabilities on the Polkadot, we want to empower Web3 developers with a refined approach to how to integrate Refungible Tokens into their projects or dApps.

By utilising Polkadot’s shared security and infrastructure, developers can feel safe knowing that their NFTs, including Refungible Tokens, are being securely created on the network and can easily be distributed to their fan base with ease.

Build with Us!

We’re the number 1 next-generation NFT chain for Polkadot & Kusama, providing the necessary tools and platforms to achieve your dreams with no code or blockchain experience needed.

Unique Network empowers you to step right into the world of web3 with NFTs 2.0, complete with unlimited advanced NFT features built for today and for the future.

Are you interested in diving into the world of digital assets and exploring what Unique has to offer? We encourage you to check out our ecosystem, where you can create, mint, customize, list and share your work with the rest of the world — the opportunities are truly endless.

Join us on our NFT journey and be part of the thousands who are currently using Unique for their dream projects:

Stay Up To Date

Follow Unique Network to get all the latest information, and join us to start your own unique, development journey:

1. Follow us on Twitter @Unique_NFTchain
2. Join our community Telegram
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4. For Developer Queries: [email protected]
5. For Any Other Queries: [email protected]

Originally published at https://unique.network on September 8, 2025.