Cardano released a new ‘converter’ that allows users to bring ERC-20 tokens issued on Ethereum to the Cardano blockchain
Commercial Project Manager at Input Output Global (IOG), Francisco Landino, says the much-awaited Cardano ERC-20 converter is nearing the testnet stage.
The firm wrote “Coming soon to testnet”:
NEW BLOG: Our incoming ERC20 converter will allow Ethereum-based tokens like $AGI @singularity_net to run on our proof-of-stake blockchain.
Coming soon to testnet. Find out more:https://t.co/a3R3MpaJ83#Cardano $ADA @Cardano
— Input Output (@InputOutputHK) May 17, 2021
Cardano released a new ‘converter’ that allows users to bring ERC-20 tokens to the Cardano blockchain
Analysts see the ERC-20 converter as a key component in competing with the number one smart contract platform, Ethereum. Landino hopes the converter will entice a significant number of Ethereum developers to jump ship and join the Cardano network.
Word of the Cardano ERC-20 convertor has been public knowledge since summer last year before Shelley rolled out. It was during a live stream hosted by IOG CEO Charles Hoskinson when details first broke of the convertor.
“I’m also going to contract a firm, on a fixed cost contract, to do an ERC-20 convertor. So basically, what this means is that this team is going to go Ethereum, take all of the existing ERC-20 tokens, and build a convertor to redeploy them on our testnet as a proof of concept once we have the native asset standard deployed.”
The ERC-20 converter will be a bridge to the Cardano chain allowing for the conversion of Ethereum tokens. Its launch will coincide with the Alonzo hard fork, which is the final piece in bringing full smart contract functionality to the network.
On selling the benefits of the switch, Landino mentioned better throughput, cheaper cost, and enhanced security:
“Once deployed, users of supported Ethereum tokens will be able to bring them over from Ethereum’s congested network and take advantage of Cardano’s transaction capacity and lower fees, while enjoying enhanced security, reduced cost, and interoperability.”
The entire conversion process is designed with convenience in mind. Users can convert Ethereum tokens with just one click. It works by translating ERC-20 tokens into a special native token on Cardano that resembles the original ERC-20 token. And because the process is bidirectional, users have the option to switch back at any time.
As demonstrated by the success of DeFi on Binance Smart Chain (BSC), users want lower fees. Working on a Proof-of-Authority (PoA) mechanism, BSC offers a three-second block time for quick settlement and a few cents BNB settlement fees. PoA is a modified version of Proof-of-Stake, where instead of staking balances in monetary value, validators’ identities perform the role of stakes. But critics argue that BSC validators may be closely connected to Binance, making it a centralized network.
It took almost three years for the Total Value Locked (TVL) on Ethereum’s DeFi network to just under $80 billion. TVL on BSC is now at $40 billion, which it hit in seven months. With that in mind, can Cardano repeat what BSC did? With easy transfers from Ethereum, low fees, and a decentralized network, expectations are higher.
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