Ethereum’s ERC-20 bridge is expected to bring ETH to Cardano, according to a trending post on Cardano subreddit.
At the moment, decentralized finance (DeFi) is worth more than $75 billion. Most of this value is in the form of Ethereum’s ERC-20 token standard, such as Chainlink (LINK), Tether (USDT), Basic Attention Token (BAT), Wrapped Bitcoin (WBTC), among others.
Read Also: Top Analysts: Cardano (ADA) Could Revisit All-Time High Soon, Poised For 604% Price Surge
However, Ethereum network has started to face gas fee issues majorly caused by network congestion. This is why there is a need for bridging ERC-20 tokens to the Cardano network.
Ethereum’s ERC-20 Bridge to Cardano
Ethereum will possibly fail to solve this problem in the short term, so an ERC-20 token bridge is being implemented by Input Output Global (IOG), the software firm behind the development of Cardano (ADA).
The bridge will enable Ethereum ecosystem to leverage a cheaper, faster, and eco-friendly alternative; the Cardano network.
Read Also: The Date Smart Contracts Will Start Running On Cardano Has Been Announced
How Does It Work?
If authorized by the issuer, a converter developed by IOG will turn any ERC-20 token into a native asset with just a few clicks from the user.
With two-way convertibility, the user can “translate” between both types of tokens, maintaining their price.
The Benefits of ERC-20 Bridge to Cardano
- Allowing Cardano users to invest in ERC-20 tokens without leaving the ecosystem.
- Making Cardano (ADA) more valuable as its network will have more traffic.
- Decongesting Ethereum network thus making its gas fees go down.
Read Also: Charles Hoskinson to Announce On Friday When Smart Contracts Will Start Running On Cardano
The Current State of the ERC-20 Token Converter
The converter is currently in the Alonzo testnet. More will come as interoperability becomes the standard of the industry.
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