The technology company and code maintainer of Cardano, Input Output, has confirmed today that a new “converter” is on its way. This will let users bring ERC20 tokens, that are issued on Ethereum, to the Cardano blockchain.
“Our incoming ERC20 converter will allow Ethereum-based tokens like AGI (SingularityNet) to run on our proof-of-stake blockchain. Coming soon to testnet,” reads the statement from the company.
Ethereum may be the most-used blockchain on the globe, but the Proof-of-Work consensus design, as it is now, has limitations, making the speed too slow (only 15 transactions per second) and the fees too expensive (in some cases, more than $200).
This is why Cardano wants to change that: “Our ERC20 converter is a tool that will allow issuing organizations and their users to handle ERC20 token migration to Cardano,” the IO project manager Francisco Landino wrote, adding “It is designed for token issuers (organizations that wish to enable the migration of their tokens to Cardano), and their users (token holders) to use the tool to move their ERC20 tokens to the Cardano network.”
After the ERC20 tokens are converted, they would run on Cardano’s Ouroboros proof-of-stake consensus mechanism. People would then be able to “convert” Ethereum tokens to ones that have the same value and use them on Cardano.
In order to move the tokens back to Ethereum, you would have the option of burning them on Cardano and then use the original ones again on the Ethereum network, as if nothing had happened.