Cardano’s ERC-20 Converter Set to Hit Test Phase
Cardano’s interoperability tool allowing conversion of ERC-20 tokens to Cardano Chain is set to hit the beta testing phase in the upcoming months.
Why ERC-20 Conversion is Necessary
Input Output Honk Kong (IOHK), the innovative arm in charge of the development of Cardano, published a blog post saying that its ERC-20 conversion tool would be betatested soon.
Deployment of the ERC-20 interoperability tool will closely follow the Alonzo hard fork, which is expected to bring smart contracts to the Cardano Chain. The Ethereum blockchain, which is the leading blockchain network in the world with over 3700 dapps and 200,000 tokens, is famous for its smart contracts.
However, as adoption of the Ethereum network increases, its transaction fees has sky-rocketed as well, reaching an all time high in recent months. The Cardano Chain employs the Proof of Stake algorithm, in contrast to Ethereum’s Proof of Work, and has been created to specifically avoid Ethereum’s current sticky problems.
“Ethereum’s proof-of-work infrastructure is challenged with ever-rising costs,” writes Francisco Landino, Project Manager at IOHK. “We foresaw this issue and providing an alternative was one of the founding principles we set for Cardano. This is about to come into fruition.”
Landino also explains why the converter tool will be necessary now more than ever. Cardano hopes to become the de facto home of the fast rising DeFi industry, and with Ethereum offering this in a sense, but not offering enough, Cardano seeks to take pole position.
The DeFi Industry has grown so much within a year and is only going to get bigger. About $700 million was reported to be locked in DeFi last year, according to DeFi Pulse. Fast-track a year later, that figure has risen to more than 70 billion USD. Cardano’s converter tool is poised to take advantage of its strength, while offering itself as a powerhouse in the DeFi space.
Here is the Cardano-Ethereum tango. A dance which is not exactly a love affair, especially as Cardano hopes to come out on top. According to Landino, Cardano’s conversion tool will allow users of supported Ethereum tokens to bring over their tokens from “Ethereum’s congested network” onto the Cardano chain with only a few clicks.
The IOHK project manager says users who migrate are set to enjoy better security, reduced costs, and interoperability.
Users who also choose to migrate their ERC-20 compatible tokens to Cardano Chain will be able to move their tokens back to Ethereum’s, should they want to move back in the future.
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