ERC-20 tokens from the Ethereum Blockchain will migrate to the Cardano Blockchain network with a new bridge update.
Ethereum tokens could migrate to the Cardano network. The new tool from IOHK will allow the migration of Ethereum network tokens (ERC-20) to Cardano. This way, the assets of the world’s most important multipurpose Blockchain will be convertible with the above instrument.
According to the developers’ publication, implementing that update will be entered shortly with Tesnet. Currently, it is in the last steps of the final verification process before the launch. Thus, one of the long-awaited bridges between different platforms will become a reality.
An essential aspect of the upgrade is that switching tokens to the Cardano Blockchain will allow you to enjoy better conditions in terms of commissions. As is known, the usability of Ethereum congested the network to such an extent that bottlenecks lead to high commissions for making transactions.
When will the bridge be available?
The migration of Ethereum tokens to the Cardano Blockchain network is one of the most promising developments. According to the creators of the bridging application, this would give meaning to Decentralized Finance (DeFi).
An important aspect that gives some advantage to Cardano is that Ethereum maintains a Proof-of-Work consensus. For its part, the former is based entirely on Proof-of-Stake. In other words, it requires less amount of energy to process transactions. This fact makes it a better-performing asset concerning the environment.
However, Ethereum will upgrade its platform to migrate from PoW to PoS. With the so-called ETH 2.0, the Blockchain of that project and Cardano’s Ouroboros would be on an equal footing. However, as far as scalability is concerned, nothing can be taken for granted despite the improvements promised by the Ethereum developers.
As for the tests on the Mainnet for the bridge application from where Ethereum tokens will be able to migrate to Cardano, they will probably impact the native currency of Cardano, named ADA. Updates in the Cardano Blockchain made the Cardano price rise considerably in the past.
How is the migration process?
The migration of ERC-20 tokens to Cardano includes options for token creators and token holders. In other words, organizations could migrate their projects, while holders of certain coins or tokens could do the same with their funds.
The exchange process will mint inside the Cardano blockchain tokens of the same value at the start of the migration. Also, tokens will be able to be reversibly burned. That is, users can retire them by burning their Cardano-based synthetic tokens.
The first project to migrate Ethereum tokens to Cardano will be SingularityNET. Thus, according to the IOG developers, the AGI token will be the first to operate the migration process.
SingularityNET [AGI] is a cryptocurrency (token) that has a protocol specifically designed to solve problems while opening the AI (Artificial Intelligence) market to the whole world. AGI allows AI-as-a-service in a permissionless platform so that anyone can use the AI services in an efficient and accessible way.
Ethereum’s scalability problems
Blockchains must address the scalability issue. In doing so, they will have a chance to compete with other payment giants such as PayPal and Visa; these networks can handle over 4000 TPS compared to the 15TPS of the Ethereum blockchain. The leading cause is their use of a PoW consensus calculation requiring high processing power.
The Scalability trilemma
The scalability trilemma involves Decentralization, Scalability, and Security. Blockchain developers must include the three factors to achieve scalability suitable for global use. Decentralization has to evolve while the system has to ensure security against attackers. Full nodes are capable of processing the most significant number of transactions. Therefore, their operation would address the issue of decentralization and security.
Indeed, there is increased pressure on blockchain network developers to improve scalability. However, Ethereum developers have devised two main ways to address this.
Shards
In the technology sector, this means dividing a database into small chunks that can operate independently. In Ethereum’s Blockchain, sharding separates transactions made by nodes into shards and distributes them across the Blockchain; each fragment works on an alternate server. Each node shards singular shards one after another. Thus, the overall time taken for each transaction is reduced.
Out-of-chain transactions
This method is similar to the lightning network that Bitcoin uses. The technique allows multiple transactions to occur outside the leading Blockchain and get verified simultaneously with the promise of enhanced security and privacy.
Research in Scalability
Considering the ultimate goal of using the Ethereum currency, Ethereum Blockchain Developers and Ethereum Foundation have established a grant available to qualified groups focused on creating blockchain scalability. Ethereum needs to address this issue as its daily transactions approach its total transaction limit of 1 million. The grant program, which ranges from $50,000 to $1 million, aims to inspire independent teams to work and cooperate with the Ethereum team to achieve the scalability of the network. The grant also gives teams access to become part of the Ethereum 2.0 development team.
Final Thoughts
Scalability is the key to the long-term use of cryptocurrencies and blockchain networks. Much experimentation is ongoing on this issue, and we can only theorize about achieving Ethereum’s scalability design. However, this is a much-needed success, as ETH customers have considered moving to other blockchain networks with faster transaction speeds and lower fees.
Ethereum, for its part, offers much hope as it has the resources to achieve and maintain the necessary levels of scalability by being among the top blockchain networks.
In this race against time, newer blockchains, like Cardano or Solana, have better technologies and functionalities, making migrating many projects and their tokens a growing possibility. It is up to Ethereum or Bitcoin developers to find new ways to stay relevant in Blockchain development. At least, they count on the network effect that makes the disappearance of older Blockchains is a pretty improbable event.