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.
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.
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.
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.