One of the most common problems regarding the cryptocurrency industry is that of the inability to effectively convert tokens into other types. It’s well and good for projects like Ethereum (ETH) or Solana (SOL) to offer great products and services, however it is equally important to be able to provide a functionality wherein users can seamlessly convert tokens at little to no cost.
With that in mind, Cardano (ADA) had previously talked about the introduction of a new ERC-20 converter. With assistance from IOG, Cardano’s main developer, the converter has long been in the works and its implementation will allow the network to successfully support the migration of various ERC-20 tokens to Cardano’s blockchain from Ethereum. What’s more is that Cardax, a leading DEX, is working towards positioning itself to take advantage of the converter and all of the benefits that it can provide.
Why is the converter important?
Blockchain interoperability is critical to increasing acceptance and growth across the board. Along with Cardano’s open-source strategy, this has always been one of its key priorities, namely making blockchain solutions available to everyone, independent of protocol choice. Having said that, importance must be given to scalability, transaction processing speed, affordable fees, and security features as these are all crucial to meeting the demands of the rapidly growing cryptocurrency space, market and community.
Cardano is therefore constructing and cooperating on a number of bridges in order to link the network to various other blockchains, and this initial converter is a critical aspect regarding the system’s overall framework. Simply put, the greater the number of these links, the stronger the network effect will be to successfully increase the flow of liquidity throughout Cardano’s respective ecosystem.
Essentially, the way that the converter works is that it ‘translates’ an ERC-20 token into any given Cardano native token all while retaining the same functionality and value, which can then be placed into Yoroi or Daedalus wallets to be used for payments as well as various other transactions. If required, the tokens may be also changed back into ERC-20 format using the built-in conversion mechanism. Moreover, the converter does not require any technical knowledge or coding skills from the users either, as they can just navigate to the tool via a URL and then create a new account or configure an existing Metamask account instead.
How does Cardax fit into all this?
Cardax is a DEX where users may exchange their ADA for any Cardano native token. This is important as it enables Cardano to have multi-asset compatibility thanks to these native tokens, which permit the users to generate uniquely specified and custom tokens in addition to directly conducting transactions with them through the Cardano blockchain.
Cardano’s ERC-20 converter shall therefore help introduce millions of people to the numerous DeFi protocols that are being developed on its network. Cardax, that plans to launch by the end of Q1 2022, is hence most likely one of the best-positioned candidates and decentralized finance initiatives to successfully capitalise on the latest influx of liquidity which will most likely result from the conversion of ERC-20 tokens into that of Cardano native tokens. In essence, Cardax aims to be a top contender regarding Cardano’s ecosystem and its easy to use interface, scalability, partnerships with the likes of MLabs, Tweag, IOG, and Well-Typed along with its low fees will all contribute towards helping Charles Hoskinson’s project continue to be successful for the long run.