EZswap Protocol: A Gamified NFT DEX Model, Poised to Become the Biggest Beneficiary of ERC404
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EZswap Protocol: A Gamified NFT DEX Model, Poised to Become the Biggest Beneficiary of ERC404
EZswap Protocol's business development model uses NFTs as the underlying asset, building upon this foundation a decentralized trading platform capable of supporting various types of new assets.
Navigating Web3 tides with focused insightsAuthor: Jonas Researcher
Market Overview
Whether in bull or bear markets, new asset types such as inscriptions continue to attract capital attention within the blockchain space, with narratives more easily gaining market acceptance. In the existing market, BTC-based BRC20 tokens have created a wealth effect through low liquidity, further amplified by support from BTC miners, making them the biggest winners of the 2023 bear market. This momentum also catalyzed the development of the BTC ecosystem—spurring new trading protocols and BTC Layer2 solutions—and gradually drawing in retail investors, Asian capital, and exchanges.
ERC404 became a hot topic across crypto Twitter (CT) in less than a week. We can observe that both inscriptions and the ERC404 protocol embed NFT concepts into novel asset structures. At its core, ERC404 combines two token standards—ERC-721 and ERC-20. When users accumulate one full ERC-20 token, they automatically receive an associated NFT; fractional holdings do not grant an NFT. Similarly, selling the fungible token (FT) results in the destruction of the corresponding NFT. This mechanism allows users to access NFT-like utility without directly owning the NFT itself. By merging NFTs with FTs, ERC404 significantly enhances NFT liquidity and expands the potential scale of these assets. This also reflects how new NFT paradigms emerge—through innovative asset packaging, fueled by capital and evolving into dominant narratives during bull markets.
Why is the ERC404 narrative still sustainable? Although the surge of low-quality clones following Pandora’s popularity and multiple rug pulls have hindered the narrative, we can identify similar catalysts by examining the evolution of inscriptions.
Technically, ERC404 and inscriptions share similarities in their simple and intuitive implementation. Yet they represent two extremes: inscriptions generate wealth effects through extremely low liquidity, while ERC404 elevates NFT liquidity to the level of fungible tokens—an evolutionary leap for NFTs.
From a capital perspective, observing Pandora_ERC404 on social media reveals that ERC404 gained widespread attention within just three days, thanks to the team's existing capital connections and the project’s strong degen appeal enabling rapid cold-start growth. Centralized exchanges (CEXs), leveraging prior experience with inscriptions, quickly listed ERC404 assets, ensuring high visibility. Additionally, ongoing improvements to the ERC404 protocol have drawn sustained interest from North American capital, further driving its development.
Undeniably, ERC404 currently has strong speculative characteristics. However, its concept integrates seamlessly with various crypto assets, indicating robust future potential. $Shib is experimenting at the meme level, potentially creating a new meme paradigm by blending 'dog picture' culture with 'shitcoin' energy. Fusionis is similarly launching ERC404 products in gaming, integrating game NFTs and tokens into in-game economic cycles.
What is EZswap Protocol?
EZswap is a game asset trading protocol built on an AMM mechanism, forming a decentralized exchange (DEX) platform specifically for game assets. Its core mission is to help games build their own integrated NFT DEXs. Leveraging P2Pool’s instant trading model, EZswap greatly improves transaction efficiency for game assets. Combined with market-making services tailored for game assets, it helps game developers overcome cold-start challenges with limited capital and achieve higher capital efficiency, enabling breakout success. To date, EZswap has partnered with over 100 games and established deep collaborations with more than 20. Beyond gaming, EZswap Protocol is expanding into new asset trading, including inscriptions and ERC404 tokens.
What is EZswap Protocol Doing?
In short, EZswap Protocol’s business model uses NFTs as foundational assets to build a decentralized trading platform capable of supporting various emerging asset types.
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ERC-1155 Assets Through Gaming
From the outset, EZswap Protocol has believed that gaming would become one of the most watched sectors post-NFT bubble burst. For nearly all game types, ERC-1155 standard NFTs serve as the primary form for in-game items—such as cards, weapon skins, or consumable gems. These NFTs often exist in large quantities, potentially exceeding traditional caps like 10k. Players frequently engage in bunch trading—buying large volumes of identical NFTs at once. In such cases, traditional orderbook models are not only inconvenient—requiring players to leave the game environment to use third-party marketplaces—but also highly inefficient in terms of gas consumption.
To address this, EZswap Protocol offers in-game marketplace construction powered by AMM mechanisms. Using EZswap’s API, game developers can rapidly and cost-effectively integrate native marketplaces directly into their games. This service dramatically enhances user experience and, from a publisher’s standpoint, provides a cost-efficient, high-efficiency trading solution. It enables faster development cycles during bull markets, allowing asset launches in liquidity-rich environments and facilitating low-cost market-making via the P2Pool model to generate wealth effects.
Take the recently launched inscription Echo on EZswap Protocol as an example: since launch, it has achieved a total trading volume of 92k $EOS, equivalent to approximately 1.5 million NFTs traded at current prices. Clearly, traditional orderbook marketplaces struggle to handle such demand. Despite EOS’s relatively underdeveloped ecosystem, Echo achieved a successful launch driven purely by community efforts.
When applying this model to gaming, highly playable games typically feature numerous low-cost, homogeneous in-game items. Currently, ERC-1155 is the most suitable token standard for such use cases. Like inscriptions, these semi-fungible NFT assets benefit significantly from DEX-style trading—not only meeting mass retail demand but also substantially improving liquidity and generating wealth effects when market makers are introduced.
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New Asset Types Represented by ERC404
ERC404 remains in a phase of technical refinement. The original team has proposed a V2 version, and international NFT developer cygaar has introduced DN404, a variant of ERC404. From a non-technical standpoint, current improvements focus primarily on functional logic—such as minting and burning processes—where multiple solutions already exist. The ERC404 V2 upgrade, for instance, streamlines the mint-burn-mint cycle into a direct NFT transfer process.
While acquiring NFTs fractionally via ERC-20 trading may temporarily reduce direct NFT trading demand, the long-term goal remains capturing NFT value. Thus, NFT trading demand won’t disappear—it will instead grow as ERC404 becomes increasingly embedded across various protocols, leading to broader value discovery.
A key future need lies in early-stage NFT pricing, enabling value distribution through ERC-20 AMM liquidity. With EZswap Protocol, projects can adopt a dual-AMM pool model—establishing liquidity simultaneously on both traditional DEXs and NFT DEXs. This allows teams to distribute tokens at desired initial prices while accelerating NFT circulation through dual-market exposure, achieving effective market-making.
We’ve seen platforms like Trader Joe integrate their native NFT marketplace with traditional DEX functionality, enabling seamless ERC404 trading within a single interface. This convenience benefits traders and attracts more ERC404 issuers to adopt such aggregated platforms as launchpads. However, DEXs offering both ERC-20 and NFT markets remain rare. Projects aiming to capture ERC404 traffic often need to rebuild an entire NFT marketplace—a challenge EZswap Protocol solves efficiently. Similar to embedded game marketplaces, project teams can leverage EZswap’s API to rapidly deploy NFT DEXs tailored for ERC404. Here, traditional DEXs act as traffic gateways, while EZswap Protocol operates as the underlying infrastructure—creating a win-win ecosystem.
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