ERC404 is an experimental ERC20/ ERC721 hybrid that includes built-in liquidity and enables fractionalization. Although these two token standards aren’t meant to be combined, this implementation attempts to support the mix as reliably as possible while limiting the downsides.

In its current form, ERC404 either separates the ERC20/ERC721 standard logic or creates routing where it can. Routing can be viewed as a lossy encoding approach: token quantity information and token ids share the same space, based on the premise that transfers too small to matter that would occupy id space do not occur-or that they don’t need to be supported.

This standard is fully experimental and not audited, though testing has been carried out to help keep execution as accurate as possible. Still, because the design overlaps standards, protocols that integrate it may not completely understand how the combined functionality behaves.