Blog > 2021
Stablefees and the Decentralized Reserve System
Exploring a new mechanism to help make fees fair, stable, and more predictable over time
10 June 2021 7 mins read
Facilitating transactions in cryptocurrency platforms stumbles on the dual utility of the platform’s underlying asset. On the one hand, users can hold and trade it as part of their investment portfolios. On the other hand, it supplies the necessary “fuel” for processing transactions.
This duality suggests that the system should have a mechanism for adjusting transaction costs, so they remain competitive and reasonable. Also, the bounded throughput of decentralized platforms per unit of time introduces another hurdle: the system should also allow the users to discover the correct price for timely transaction processing, depending on their individual needs.
Why not drop transaction fees altogether? Three reasons: One, transaction processing incurs costs on the system’s side (in terms of computation and storage). It is reasonable to allow transaction processors (stake pool operators, in the case of Cardano) to offset their costs. Two, even with a theoretically infinite capacity, it is important to prevent transaction issuers from saturating the network with worthless transactions. Three, it is appropriate to incentivize transaction processors to provide quality of service. A surge in demand should influence their payoffs accordingly.
Adding a fee to each transaction can address the above considerations.
Bitcoin and beyond
Bitcoin set out the first mechanism for pricing transactions in distributed ledger platforms. This mechanism resembles a first-price auction: transactions bid for a place in a block naming a specific reward, and block producers select the transactions that they prefer to include. Block producers also get rewarded with the right to mint new coins, i.e., their operation is subsidized by the whole community via inflation of the total coin supply. Inflation drops geometrically over time, and transaction fees become increasingly dominant in the rewards. This mechanism, while enabling Bitcoin to run for well over a decade, has been criticized for its inefficiency. Transaction costs have also risen over time.
In this blog post, we explore a new mechanism that builds on Cardano's approach to ledger rules and system assets, and complements the Babel fees concept. The objective is making fees fair, stable, and predictable over time. We describe the mechanism in the context of Cardano. However, it can be adapted to any other cryptocurrency with similar characteristics.
The core idea behind Stablefees is to have a base price for transactions through pegging to a basket of commodities or currencies. Stablefees includes a native "decentralized reserve" contract that issues and manages a stablecoin pegged to the basket. A comparison in the fiat world might be the International Monetary Fund’s SDR, (established in 1969) and valued based on a basket of five currencies—the U.S. dollar, the euro, the Chinese renminbi, the Japanese yen, and the British pound sterling. The stablecoin --- let’s call it "Basket Equivalent Coin" (BEC) --- is the currency used for paying transaction fees (and all other real world pricing needs of the platform, e.g., SPO costs).
In this system, ada will play a dual role: Reserve asset of the decentralized reserve, and reward currency for staking. It will also be the fall-back currency in extreme scenarios where the reserve contract is in a liquidity crunch. Before a transaction, the issuer will have to obtain BECs, either via other third parties or directly by sending ada to the decentralized reserve contract. On what basis will the reserve issue BECs? The reserve contract will also issue equity shares -we will call them decentralized equity coins (DECs)-, in exchange of ada. Leveraging the value of DECs, the decentralized reserve will often adjust the value of BEC so it is pegged on the underlying basket of commodities. In other words, DECs will absorb the fluctuations of ada vs. the basket to ensure that the real-world value of BECs remains stable (cf. the AgeUSD stablecoin design that has been already deployed and used on Ergo).
This trinity of coinage, issued natively by the system, will attract different cohorts. BECs' stability and liquidity might be attractive to risk-averse, transaction-intensive holders. DECs will offer the highest rewards if ada goes up, but also take the most significant hit when ada goes down. Long-term holders may find DECs more attractive. Also, since decentralized reserve prices these coins in ada, both BECs and DECs can facilitate participation in staking and governance. Returns can be issued at different rates, reflecting the different nature of each coin. Ultimately, rewards will always be denominated and payable in ada, which will remain the most versatile of all three coins.
The centerpiece of this mechanism is an on-chain oracle that determines the price of the basket in ada. SPOs can implement this oracle in a decentralized manner. The reserve can offer extra rewards to all oracle contributors from the fees collected during BEC/DEC issuances. This will ensure two things: thousands of geographically-diverse contributors, and ledger rules calculating a synthesized exchange rate in some canonical way (through a weighted median across all price submissions in an epoch, for example). If oracle contributors manipulate their contributions, they can be held accountable by tracking their reputation and performance on-chain.
The pricing mechanism
How would one price transactions and reward block producers? Using the current approach in Cardano, each transaction will be deterministically mapped to a precise value denominated in BECs, using a formula determined by the ledger rules. The formula will take into account both transaction size and its computational requirements, and may also incorporate runtime metrics (such as the average system load). The resulting value will be the base fee guaranteeing that the transaction will be processed by the system. Given the base fee, end users will be able to apply a multiplier if they wish (which will be a value at least 1, e.g., 1.5x, 3x, etc.) to increase the fee and accelerate processing. This will become relevant at times of surging demand.
This approach has one advantage when compared with the first-price auction model: the pricing mechanism is continuously stabilized to a reasonable default value. Users perform price discovery in one direction only to accelerate processing, if required. Also, transaction issuers can store BECs to secure their future transaction-issuing ability without being affected by ada price volatility.
Stablefees and Babel fees
The Stablefees mechanism can be considered a natural extension of Babel fees ---spot conversion of BECs into ada by the decentralized reserve. Both mechanisms complement (and are compatible with) each other. Babel fees can be deployed together with Stablefees with just one change: Using BECs to cover Babel fee liabilities, instead of ada. This also means that fees will always be payable in ada (via a Babel fee liability convertible in ada on the spot). Hence, the whole mechanism is backwards compatible: it won’t affect occasional users who just hold ada and do not wish to obtain BECs.
A final point about diversity. While the above narrative identifies a unique and global BEC, the same mechanism can be used to issue regional BECs pegged to different baskets of commodities, which could possibly be weighted differently. Such “regional” BECs will be able to increase system inclusivity, while enabling SPOs to have more fine-grained policies in terms of transaction inclusion.
The above mechanism requires a decentralized reserve contract and the issuance of BECs and DECs by the contract to buyers. A “lite” version avoids the reserve contract and directly adjusts the fee formula by pegging it onto the agreed basket of commodities through the price oracle. The resulting system denominates transaction fees nominally in BECs and immediately converts them into ada. The payable amount fluctuates, depending on the value of BEC. The mechanism is otherwise identical, also facilitating unidirectional price discovery through the multiplier. The only disadvantage is that a prospective transaction issuer has no access to a native token that enables transaction processing predictably; transaction issuers must pay fees in ada. Still, the fees will continuously adjust and remain stable via the pegging mechanism with respect to the basket. As a result, a transaction issuer will be able to organize their off-chain asset portfolio to meet their transaction needs effectively.
The road ahead
Our team is currently researching the granular details of the Stablefees mechanism. Once this research is complete, Stablefees can be integrated into Cardano to offer fair and predictable transaction pricing. Moreover, the price oracle and the global BEC (and regional variants, if included) will undoubtedly find uses beyond paying transaction fees, expanding the capabilities of decentralized applications in the Cardano ecosystem.
A close look at the software running Cardano
Learn about the ‘stack’ of components that interact to run the blockchain platform
8 June 2021 5 mins read
Cardano has been designed in modules, with linked components that can be used in various ways. These components form the Cardano ‘platform stack’. They work together under the hood to support the construction and use of the live Cardano blockchain.
We are currently in the early testnet phase on the way to the Alonzo hard fork, which will bring full smart contract capability to Cardano. This process is highly complex, requiring the steady upgrade of the different elements which make up the Cardano platform, and their careful integration and testing. So, it is a good time to revisit these components, explain some of the terminology, and discover how they interact within the ‘platform stack’.
Elements of the Cardano platform stack
Figure 1. Components that communicate with the Cardano node
The platform stack for Cardano includes these core components:
- Cardano node (and associated processes)
- Cardano wallet
- Wallet command line interface (CLI)
- DB Sync (synchronizes blockchain data with a relational database)
- PostgreSQL database (which interacts with GraphQL, REST API, and Smash)
- Smash server
- Rosetta API (blockchain communication protocol)
Note that the Daedalus wallet is not part of the core stack, but does communicate with the components (Figure 1).
The node and the networking layer
First, let's take a look at the Cardano node. This software runs on your computer and underpins the network, enabling everyone to participate in the decentralized blockchain. The node integrates the consensus, ledger, and networking sub-components, providing top-level configuration, API, CLI, logging, memory management, and monitoring capabilities that can be used by other Cardano components or by skilled users. Daedalus is a full-node wallet, so if you are running that on your local machine, you are effectively helping to run the network.
The networking layer
Next, we have the networking layer. This links each Cardano node into a distributed system that manages the blockchain and associated services. The network consists of a collection of nodes that communicate with each other to maintain the distributed ledger, support transaction submission, and interact with user wallets and other services. The core of the network is built around the decentralized nodes – the stake pools – that collectively validate blocks, and add new blocks to the chain. They are supported by dedicated relay nodes that manage network connections and establish the structure of the network as a whole. The dedicated consumer nodes that are run by the Daedalus wallet and other services connect to this network to track and submit transactions on-chain.
Cardano nodes maintain connections with their peers. A set of mini-protocols enable communication between the nodes. Each mini-protocol implements a basic information exchange requirement, such as informing peers of the latest block, sharing blocks as needed, or sharing new transactions around the Cardano network. For connection purposes, mini-protocols are determined by the version of the network protocol.
Cardano wallet backend
The Cardano wallet backend component supports the graphical user interface of the Daedalus wallet. It is used to send and receive ada. Behind the scenes, the wallet runs a full Cardano node. Unlike a light client wallet, it loads the entire shared ledger and validates all transactions, thus bolstering the security of the blockchain for everyone.
Wallet command line interface (CLI)
The wallet command line interface (CLI) supports interactions with the actual blockchain. More technically advanced users can use the CLI to work with a collection of tools for generating keys, constructing transactions, creating certificates, and performing other tasks. It is organized in a hierarchy of subcommands, and each level comes with its own built-in documentation of command syntax and options.
DB Sync is a component that follows the activities on the Cardano chain and stores blocks and transactions in PostgreSQL. As a ‘middleware’ component, it powers cardano-graphql. DB Sync stores blockchain data fetched from cardano-node in an intermediate database to enable higher-level interfaces for blockchain exploration. It also provides a number of queries to fetch Cardano blockchain data from the PostgreSQL, and supports services such as the Cardano Explorer, a graphical user interface that reflects the blockchain data in a straightforward way. Cardano GraphQL is a cross-platform API for the GraphQL data query language.
The Rosetta application programming interface provides a high-level interface that aims to make the integration process easier, faster, and more reliable so that you can build once and integrate your blockchain everywhere. We have created a unique cardano-rosetta implementation to simplify the process of integration with Cardano. This interface is particularly useful for exchanges, since they can interact with the Cardano chain using the same interface that they use with other blockchains.
With smart contracts coming to Cardano soon, this means that Plutus, the native smart contract language, and other smart contract development languages like Marlowe for finance and Glow for DApps will be integrated into the Cardano stack. IO Global’s engineers will provide new and extended components to compile Plutus, Marlowe, and Glow scripts, submit them on-chain, and interact with them (Figure 2).
Figure 2. Plutus, Marlowe, Glow, Solidity, and IELE can all be used to write Cardano smart contracts
The Alonzo protocol upgrade will build on recent token upgrades and is being deployed to the mainnet via several testnets. Our Plutus partners and Plutus Pioneers will help us to test Plutus Core and will be part of the user acceptance phase before mainnet deployment. At this point we will officially add the Plutus and Marlowe components, such as both interpreters, to Cardano’s platform stack.
To keep up to date with the Alonzo rollout, please check our social channels and blog page.
Nervos partnership to build the first cross-chain bridge with Cardano
Our new collab lets Cardano and Nervos token holders transmit their value across both platforms while building interoperability across the crypto space
2 June 2021 3 mins read
IOHK and Nervos are teaming up to build a bridge of interoperability between Cardano and the Nervos Network. Once completed, this pioneering cross-chain bridge will enable users to transact assets between the two blockchains. The end goal is to foster greater interoperability while expanding the global reach and utility of both Nervos and Cardano.
The Nervos ‘Common Knowledge Base’ (CKB) is a permissionless, layer 1, open-source, proof-of-work blockchain protocol focused on creating the foundations for an interoperable universal public network. It allows any crypto asset to be kept in a secure, immutable, and permissionless environment with the added benefit of smart contracts and layer 2 scaling.
Nervos is developing this robust network through three key components. Together, these make up the Universal Passport, Nervos’ approach to next generation interoperability.
- PW Core – enables developers to build applications on all chains
- Nervos’ Polyjuice – an Ethereum-compatible layer that allows developers to port a smart contract from Ethereum to Nervos
- Force Bridge – a trustless bridge that enables cross-chain transactions between Nervos and a spectrum of blockchains. Nervos will use Force Bridge to connect directly to Cardano, which means that users will be able to transact using their existing Cardano wallets.
Bridging blockchains with transportable tokens
So what does this mean in practice? Holders of Nervos CKByte (CKB) and ada will be able to transact both currencies interchangeably. Nervos users will also be able to take advantage of Cardano's native asset standard to create tokens that can be ported and used across both networks. On top of this, the bridge enables developers on both chains gain access to services and features to expand their DApp ecosystem and user bases.
Mousebelt, a full-service blockchain accelerator, will build the bridge with financial support from Nervos. The Cardano team will contribute expertise and resources to connect Cardano to the bridge. Development work is already underway and it is expected to be completed in the next six weeks.
'Using the Force Bridge to link the Nervos Network and Cardano is especially exciting given the relationship we have already built with IOHK,' said Kevin Wang, co-founder of Nervos. 'We have been growing our research and development partnership, but we will soon have a tangible bridge that will also showcase the power of the Force Bridge and push us further along the road to a functional and interoperable network.'
This bridge is just part of our collaboration with Nervos. 'We share a vision of a world that works on a ‘constellation’ of interoperating blockchains,' says Romain Pellerin, CTO at Input Output. 'We believe that academic research is also fundamental to advancing the entire crypto space. Together we will also be co-authoring academic papers to pioneer improvements to the UTXO model, explore universal accounting standards, and contribute to the future development of decentralized technology through open-source research.'
Blockchain technology will only achieve mainstream acceptance when end users are not locked into one blockchain or standard, but can seamlessly access value and utility, regardless of which blockchain they are using. 'Bridges like this are an absolute necessity in order to ensure that users have a seamless experience,' continued Pellerin. ‘By connecting our communities and finding innovative new ways to work together, as we have been doing with Nervos, we can ensure that blockchain lives up to its promises of creating a fairer and more efficient global financial operating system.'
Check out the Nervos website for more information on upcoming partnerships and research initiatives.
Reimagining peer to peer finance with Marlowe
Marlowe decentralizes financial tools allowing anyone to create and execute peer-to-peer financial agreements
26 May 2021 6 mins read
A while ago, I logged in to my stock trading platform to buy some exchange-traded funds (ETFs). Alas, the platform was down! It turned out that the surge in the GameStop stock had forced quite a few trading platforms to shut down temporarily. We weren’t in the middle of a financial crisis, and I never expected that my bank or brokerage would block me from using my own funds without warning. I had assumed that I would always be able to access my funds, place trades, and reap profits or losses – a service for which I pay a handsome fee.
In the following days, several other stock brokers and trading platforms began blocking their users from performing trades that didn’t favour the brokers’ own agenda. Robinhood – which positions itself as the platform that democratizes finance – completely censored its users from buying GameStop stock. Are we ever truly in control of our money?
Almost all of us have given custody of our funds to some third-party, leaving us at their discretion to decide if and when those funds can be accessed, used, or even viewed. The commonality between these third-party banks and brokers is that there is a central point of control. In the case of Robinhood and GameStop, we have seen how this centralization can lead to failure. The central point of control can be influenced, attacked, or manipulated by an external self-interested actor, making it the antithesis of democratized finance.
This is the core motivator of decentralized finance, commonly known as DeFi. DeFi offers a similar set of financial tools offered by Wall Street such as lending, escrows, derivatives, swaps, and securities. What makes DeFi platforms stand out is their ability to offer these financial instruments without the need for central market makers, banks, or brokers. Each financial agreement is represented as a smart contract on the blockchain, and is settled algorithmically. Their decentralized nature makes them far more resilient to market manipulation or the failure of a centralized system.
We are currently developing a suite of Marlowe products to democratize finance and enable easy access to financial agreements. This includes Marlowe Run, a new product that will allow users to seamlessly execute off-the-shelf financial agreements with friends or clients in a secure fashion, and on their own. With added automation features and no need for third-parties, this peer-to-peer solution will be cost-effective, and more importantly, democratizing.
What is the Marlowe suite?
With Marlowe, we aim to democratize finance by facilitating peer-to-peer agreements that run on a blockchain. We seek to empower people to create their own financial instruments and set up agreements with anyone with whom they want to interact. Marlowe will offer a suite of products, each product serving a different function and set of users. Marlowe’s overarching product strategy comprises three streams – Marlowe for developers, Marlowe for end users, and Marlowe for enterprise.
Marlowe for developers
Marlowe for developers includes Marlowe Build and Marlowe Play (also called the Marlowe Playground) as well as the input to the Marlowe Library. Marlowe Build and Marlowe Play together enable end-to-end financial smart contract development.
Developers can compose smart contract code on Marlowe Build. Then, they can perform preliminary iterative design using simulations, and formally verify and test smart contracts on Marlowe Play. These capabilities – paired with a purpose-built domain-specific language (DSL) for finance – ensure that the contracts are easy and straightforward to build, as well as being secure, verifiable, and rigorously tested. Once built and tested, developers may contribute them to our open-source smart contract template library, the Marlowe Library.
Marlowe for end users
Marlowe for end users will bring an intuitive, straightforward, and seamless interface for users to execute financial agreements with their friends, colleagues, or clients on the blockchain. This includes Marlowe Run and gives access to a variety of templates for financial instruments from the Marlowe Library. We’re designing these products with the user in mind. To make financial agreements on the Marlowe Run, the user does not need to know the ins and outs of blockchain, or how to write smart contracts. Every step of the contract is explained in non-technical language, and each action is performed only with the user’s explicit authorization. Our team has built a suite of rigorously tested and verified financial tools including escrows, debt securities, and swaps that can be used on the Marlowe Run. These – and many more verified open-source contracts – are made available through the Marlowe Library.
Marlowe for enterprise
Marlowe for enterprise aims to expand DeFi beyond individual users, helping enterprises to access the tangible benefits of smart contracts. This will include a bespoke, customizable suite of capabilities and financial agreements that are tailored to a commercial use case, with the provision of smart contract templates that adopt Algorithmic Contract Types Unified Standards (Actus) for financial contracts.
Implementing Marlowe on Cardano
As a part of the Goguen rollout, we are now in the process of completing the implementation of Marlowe on Cardano, giving users and organizations the opportunity to execute DeFi contracts they have written themselves or downloaded from a contract repository. Marlowe will run first of all on the Cardano blockchain, but it is blockchain-agnostic so could run on other blockchains to reach an even broader audience in the future.
What comes next?
Marlowe for end users will come online in stages throughout 2021. First, is the prototype of Marlowe Run, where users can demo and try out their own financial agreements. This will include a suite of financial smart contract templates that users can customize to their needs. This prototype will allow users to explore the experience of making financial agreements in a decentralized fashion, all in a peer-to-peer manner without requiring a value-extracting third party. To use the Marlowe Run prototype, users don’t need to own any real tokens, so they may try the demo before they onboard. This rollout will include a suite of template financial instruments, built by our in-house developers. These templates can be used to execute test agreements on Marlowe Run. We’ll share a demo of Marlowe Run on this month’s Cardano360 show (airs May 27) so join us for that.
We are committed to delivering this suite of products for the Marlowe ecosystem that empower people across the globe to build, control, and execute their own financial instruments on their terms.
We are planning a series of webinars on decentralized finance with Marlowe (starting June 3rd), you can register on our website for these webinars now!
Bringing ERC20 to Cardano
Our new ERC20 converter will allow Ethereum tokens like AGI to run on our proof-of-stake blockchain – coming soon to testnet
17 May 2021 7 mins read
Connecting blockchain protocols and collaborating on applications are essential to achieving the promise of decentralized finance (DeFi) and provide an alternative to the traditional banking system.
According to DeFi Pulse, a tracking website, cryptocurrency to a total value of over ‘$75 billion is now locked up’ in DeFi. A year ago, the total was just $700 million. Most of this value is in the form of crypto-assets based on the ERC20 token standard.
But Ethereum’s proof-of-work infrastructure is challenged with ever-rising costs. We foresaw this issue and providing an alternative was one of the founding principles we set for Cardano. This is about to come into fruition.
To expand the variety of use cases for application developers and businesses, Cardano will support the ERC20 token migration to its platform. The Alonzo hard fork and Plutus smart contracts are on the way. Once deployed, users of supported Ethereum tokens will be able to bring them over from Ethereum's congested network and take advantage of Cardano's transaction capacity and lower fees, while enjoying enhanced security, reduced cost, and interoperability.
Let’s take a closer look at the nature of ERC20 to understand why this standard fits the market trends in terms of business needs. First, of course, Ethereum brought the concept of smart contracts and ‘programmable money’ to the blockchain in 2015. Since then, tokenization and the ERC20 token have gained popularity because of utility in everyday business transactions. Applications built on a blockchain can provide tokens that can serve as:
- a payment unit
- a transaction unit
- access to digital services
- a reward or incentive
- a right to vote
- an investment mechanism
Well-designed ERC20 tokens address many needs, and the more useful they become, the more demand grows and so their value grows accordingly. That is why these tokens are widely used and are so well supported by wallets and exchanges.
Ethereum v Cardano
The ERC20 standard was invented for Ethereum, and as of today, there are over 400,000 contracts based on this token standard with examples including Binance coin (BNB), Tether (USDT), Uniswap (UNI), and Dai (DAI) to name a few.
Ethereum is a popular and functional blockchain platform, but it is slowing down and becoming more expensive. As more network participants interact with decentralized applications, the ‘gas’ fees paid for validating transactions are rising sharply (Figure 1).
Figure 1. Ethereum gas fees are increasing
The problems being experienced by Ethereum users have also been identified by a Cointelegraph survey cited in ‘DeFi Adoption 2020’:
45% of platforms built on Ethereum name scalability and high gas costs among the top three problems constraining mass DeFi adoption.
Ethereum has not yet resolved these challenges and is unlikely to do so in the short term. So many businesses will want to consider other options.
By enabling the migration of ERC20 tokens to Cardano, we focus on delivering a value proposition that leverages Cardano’s advantages over Ethereum. In particular, Cardano's higher capacity for transaction processing and lower fees when compared with Ethereum's high cost and often congested traffic.
Enabled by Ouroboros
The key to addressing the problem of network congestion and high fees is Cardano’s Ouroboros proof-of-stake consensus mechanism. Compared with Ethereum’s proof-of-work protocol, Ouroboros needs far less energy to process network transactions; it runs using amounts of electricity on the scale of a large house, rather than a small country. Because of this, Ouroboros is not only eco-friendly but also needs far lower fees to process transactions.
Additionally, Cardano does not require smart contract execution costs as the ledger supports native token functionality with its built-in accounting model. This means that the tracking, transfer, and ownership of different types of assets are handled by the ledger instead of smart contracts. Whereas the creation and transfer of ERC20 tokens on Ethereum require the manual modification of the standard contract type, the logic for this is built into Cardano, which also eliminates the risk of errors and vulnerabilities.
How the ERC20 converter works
Cardano currently supports ada and native tokens, which have proven successful with over 160,000 tokens minted. We are now launching an ERC20 converter to ensure better interoperability in the future as well as lay a solid background for extended business opportunities.
Our ERC20 converter is a tool that will allow issuing organizations and their users to handle ERC20 token migration to Cardano. 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.
Users can convert their Ethereum tokens in just a few clicks, and when moved across, these tokens will be ‘translated’ into a special native token on Cardano that has the same value and works just like an ERC20. Additionally, if the user wishes to do so at a later stage, they can move their tokens back to the source network by burning them on Cardano. Two-way convertibility is baked in.
We’ll soon spin up a version of the ERC20 converter tool on a dedicated testnet. IO Global is currently working with partners for migration to Cardano, and SingularityNET will be the first of these. The ERC20 converter will introduce a new SingularityNET AGIX token, the deployment of which marks the first milestone in the SingularityNET to Cardano migration plan. The initial testnet will allow users to assess the process of migration while working with AGIX tokens both in Cardano and Ethereum Kovan testnets.
It will be possible to authenticate an account using Metamask (an extension for the Chrome browser) with more options to come later. Users will also need to add their Daedalus testnet address so they can migrate their tokens to Cardano and easily track balances and transactions.
When users log into their ERC20 converter account, they will see SingularityNET tokens listed and available for migration, and, by clicking on a token ‒ details such as token balance. They will just need to select the token, indicate the amount they would like to convert, and then migrate them by specifying a Cardano address. When tokens migrate to the address, it will be possible to use them for payments and transactions from the Daedalus wallet. All the activities will be visible both within Etherscan and the Cardano Explorer.
Figure 2. ERC20 converter dashboard
At later stages, users will see different types of tokens within the dashboard. Tokens available for migration will be listed first, and if not yet eligible – it will be possible to subscribe for updates about any changes.
A glance ahead
As the number of ERC20 converter partnerships increases, the range of token types supported will grow. Currently, our partners need to be custodians of their tokens, however, we will achieve greater interoperability while onboarding organizations when Plutus smart contracts operate on mainnet.
Our goal is to support many tokens to create possibilities for business deals. So, further down the road, with a variety of tokens, the ERC20 converter will act as a bridge between blockchains, and this will promote effective cross-chain communication.
The ERC20 converter testnet is now in the final stages of quality assurance testing before the public launch. This stage will allow us to test the user journey and improve their experience along with fixing any occurring issues. We will also soon provide the dedicated testnet environment with relevant documentation and instructions on how users can test the converter capabilities.
We’ll share an update on May’s Cardano360 show. Meanwhile, stay tuned and follow our Twitter announcements to find out more in due course!