TL;DR Breakdown
- Dfinity activates its ETH bridge, Terabethia, to connect its ICP.
- ERC-20 tokens will now exist naturally on the Internet Computer Chain.
Dfiniy’s cross-chain bridge will allow ERC-20 tokens to run naturally on its network. The bridge connects the ETH network and Dfinity’s Internet Computer Protocol (ICP). The network aims at facilitating the decentralization of its infrastructure.
Dfinity activates its Internet Computer Chain
The project by Dfinity has backing from organizations like Polychain, a16z, among others. It aims to bridge with ETH and allow the ERC-20 tokens to operate freely in the ICP network. This bridge is known as Terabethia, and it allows for cross-chain transactions, asset mirroring, among other things.
The bridge runs on the forked ETH-scaling network StarkWare and will facilitate the communication between smart contracts on both networks. It will also allow any user to mirror ERC 20 assets and use them on the ICP. It will also allow for the reverse process of mirroring assets into Dfinity’s network.
Terabethia also allows chains to rely on each other when exchanging data, transfers, or smart contract calls. It will also enable the chains to continue functioning according to their initial programming instructions.
Per Harrison Hines, the founder of Psychedelic, a studio involved in constructing the Terabethia bridge, the bridge may become ETH’s best L2. He said that the Internet Computer could extend the usefulness of ETH just like how the latter did to BTC.
What does the Dfinity ETH bridge do?
The Terabethia bridge came before integrating the Internet Computer and the ETH network. Once the chains get connected, they will achieve interoperability. The ICP will also have the ability to hold ERC20 tokens. However, it will not support the existence of the direct ERC 20 tokens on it. Luckily, the bridge will help deal with these issues.
The exchange of assets between Terabethia and ETH will help create liquidity for the involved tokens. It will also help develop other crypto products such as NFTs or DeFi products. DeFi might thrive in this ecosystem since it relies on smart contracts to operate smoothly. Therefore, the interoperability between the ICP and ETH network will efficiently run across many ERC20 tokens.
The ICP rolled out in 2021, and its primary target is to be easily scalable due to its “reverse gas model.” This model allows developers to supply the gas fees required for their contracts and blockchain projects.
Even though this innovation looks impressive, the response from investors has not been spectacular. The initial token for the ICP has lost its value by 97% since its May 2021 rollout.
The coin was selling at $700, but now it is around $21. The main reason behind this drop is holders with large amounts of tokens sell their stash. Today, the coin had a market cap of $5 B, a sizable reduction of 72 % from the $18 B figure of the launch month.
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