IOHK announces on May 17 that the instrument will soon be launching in a test phase. Eventually, the converter will be transferred to Cardano’s mainnet, or main network. That will be after the highly anticipated “Alonzo” hard fork, which will finally introduce smart contracts to Cardano.
ERC-20 tokens are a standard on Ethereum and are mainly used in decentralized finance (DeFi) in the past year. According to DeFi Pulse, the amount of ERC-20 tokens trapped in smart contracts in DeFi projects on Ethereum has grown from under $ 1 billion to as much as $ 80 billion in the past year, according to DeFi Pulse. No wonder that IOHK wants to take a piece of this new market.
However, DeFi is causing enormous pressure on Ethereum, which has caused transaction costs to rise sharply in the past year. Francisco Landino, project manager at IOHK, lashes out at Ethereum and praises Cardano:
“Once implemented, users of supported Ethereum tokens can transfer them from Ethereum’s congested network and take advantage of Cardano’s transaction capability and lower costs, while enjoying enhanced security, lower costs and interoperability.”
Cardano is already a proof-of-stake (PoS) network and although Ethereum will eventually switch to this as well, it may still take a while before the process is complete. Landino also reports that the converter could eventually grow into a so-called cross-blockchain bridge.
The AGI token from the artificial intelligence project SingularityNET will be the first ERC-20 token to migrate to Cardano. The Alonzo hard fork is expected to launch sometime at the end of the summer.