Decentralized finance (DeFi) on the Cardano blockchain is coming closer to becoming a reality, with a token migration bridge that is soon to enter the testing phase. Cardano’s ERC-20 converter tool that has built-in two-way convertibility functionality will soon be available for beta testing.
The project manager at Input Output Hong Kong (IOHK), Francisco Landino, confirmed that the platform’s ERC-20 migration tool will soon unveil testnet deployment. IOHK is the research and development arm that is responsible for Cardano.
In a May 17 blog post, Landino said that the converter tool will support the migration of Ethereum-based tokens to the Cardano chain. This converter bridge will follow Cardano’s highly anticipated Alonxo hard fork that is expected to introduce smart contract functionality to the network. While explaining the importance of the ERC-20 conversion tool, Landino wrote:
“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.”
As part of this announcement, the IOHK executive also said that the ERC-20 conversion tool was an integral part of efforts to leverage the value proposition of Cardano over Ethereum in terms of the parameters like transaction costs and scalability.
With just a few clicks, the crypto projects can migrate their native tokens to the Cardano chain through the converter tool. The Cardano analog will have the same value as the Ethereum-based ‘coin,’ together with baked-in two-way convertibility which means that the process can get reversed at a later date.
The plans for this converter testnet deployment are underway, with Landino saying that SingularityNET’s AGI token is set to be the first ERC-20 coin shifted to the Cardano chain.
In the future, the IOHK executive stated that the Cardano team envisages the possibility of the ERC-20 converter tool to operating as a cross-blockchain bridge.
Data acquired from DappRadar sets the adjusted total value locked in the Ethereum decentralized finance market at more than $68.5 billion. Amid all this debate of layer-two solutions becoming the next frontier for the Ether-based DeFi market, most of the major altcoin chains including Cardano are seeking to become the de facto host of the emerging decentralized finance arena.
