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With this article, we are going to analyze the upcoming introduction of ERC20 tokens on Cardano. It will be a real revolution. Why? Let’s find out together.
Cardano, a promising project among the top-ten cryptocurrencies
From the very beginning, one of the main milestones of Cardano has been the concept of interoperability. This term refers to wanting to create real bridges between the different blockchains on the market that still fail to communicate with each other. In this sense, Cardano’s intent of wanting to take a first step in this direction, precisely with ERC20, certainly stands out. And the numbers are no joke. Today the ERC20 token market has a whopping $75 billion. Yes, you read that correctly, that is a huge value. And the issues these projects face on a daily basis are also huge.
The problem of congestion on the Ethereum network.
Ethereum is an outdated project. And if we really have to be honest, it wasn’t even born with the intention of becoming such a widely used infrastructure. Or rather, that was more or less the intent but the development team did not in the least expect such an unbridled use and use case. Let us remember that we are, after all, talking about almost five years ago. The market was, compared to today, at least twenty times smaller. With popularity and volumes comes success, but at the same time, the limitations posed by the technology used become apparent.
Today we see insane costs per transaction. At peak times Ethereum gas fees can even reach around €100, per single transaction! Moreover, it is now well known that the Proof of work model, just the way it is designed, leads to higher and higher costs, year after year and especially as trading volumes grow. And where there is a problem lies a solution. The Cardano team wants to turn the situation around to its advantage. How? By guaranteeing fast but above all cheap transactions. We’re talking pennies on the dollar.
The market is growing and ERC20 use cases are also increasing. Indeed, we find smart contracts for cryptocurrency payments, transactions between addresses, access to digital services, voting rights, investment mechanisms, and reward and incentive systems. As time goes on, new ones will surely emerge. That is why wallets and exchanges now have compatibility with this type of token as a standard.
The innovation brought by Cardano’s Ouroboros protocol
The Ouroboros consensus mechanism, based on Proof of Stake, is at the energy level hundreds of times more efficient than the PoW mechanism used by Ethereum. So each transaction on Cardano’s blockchain costs infinitely less in terms of both currency and environmental impact. It also does not require the cost of executing smart contracts since it supports native token functionality directly through the native embedded system.
In other words, use cases such as possession, transfer, and tracking of different types of assets are handled by the native system and not by the smart contracts themselves, so no fee is required. Moreover, this logic is written directly into Cardano’s code thus reducing the risks of errors and various vulnerabilities.
ERC20 converter on Cardano
Native tokens have been introduced on Cardano for some time now with wide success. In fact, we register well over 160,000 registered tokens. And now they are about to officially launch their ERC20 converter. The opportunities to develop business on this blockchain will finally become a reality. Thanks to this tool it will be really easy to move existing and operational businesses without any cost or effort. It would almost seem like a natural choice. With just a few clicks the game is done, from ERC20 you immediately migrate to Cardano.
Conclusion: ERC20 tokens on Cardano
The introduction of ERC20 tokens on Cardano is a momentous breakthrough. For the first time, Ethereum will not be the sole holder of primacy because another major rising star in the industry is about to take over with full force. We could see hundreds of businesses migrate month after month to Cardano and decree the end, or perhaps the rebirth, of Ethereum, periodically going to streamline its volumes and mathematically reduce its costs per transaction.
Will the price of Cardano fly through the roof? Certainly, this move seems to be a winning strategy that will bring a massive amount of liquidity and interest to the project, but only time will answer that question.
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