Dfinity’s Internet Computer Opens Ethereum Bridge
Ethereum-based assets can now natively exist on Internet Computer via the new bridge that connects the blockchains.
A new cross-blockchain bridge connecting the Ethereum network with Dfinity’s Internet Computer will allow ERC-20 tokens to exist natively on Dfinity’s network, developers behind the bridge said this week.
Internet Computer is a blockchain built by the Dfinity Foundation to help facilitate a decentralized layer of web infrastructure. It is backed by prominent funds such as a16z and Polychain Capital.
Called Terabethia, the bridge enables cross-chain contract communication, asset mirroring and transfers across different blockchains. It is built on a forked version of Ethereum scaling tool StarkWare, and will enable contracts on both blockchains to communicate and allow anyone to mirror and use any Ethereum asset on the Internet Computer and vice versa.
Bridges allow blockchains to exchange data, tokens or smart contract instructions with each other. These operate independently of the rules or consensus mechanisms of whichever blockchains they connect.
“Similarly to how Ethereum extended the functionality, usefulness and value of Bitcoin, we believe the Internet Computer has the potential to do the same for Ethereum assets and applications, and could even potentially become the best L2 (layer 2) for Ethereum long term,” explained Harrison Hines, founder of Psychedelic, the Web 3 development studio behind Terabethia.
What the bridge does
The bridge comes ahead of Internet Computer’s native Ethereum integration, which will allow interoperability between the two blockchains. The integration will allow Internet Computer smart contracts to hold Ethereum assets on Ethereum and make calls to them, but won’t allow ERC-20 assets to directly exist. A bridge helps solve that problem.
Porting assets between the Internet Computer and Ethereum can help create liquidity and complementary products for the user base of the two blockchains, such as non-fungible tokens (NFTs) or other decentralized finance (DeFi) products.
DeFi protocols rely on smart contracts instead of third parties to provide financial services, such as lending, borrowing and trading, to users.
Internet Computer started this year with a “reverse gas model” to focus on scalability. The model sees developers supply the funds needed to run the applications/contracts that use their gas – a fee paid to use a blockchain, Internet Computer in this case.
But the response among investors has been weak. Tokens of Internet Computer (ICP) fell 97% since their issuance in May – from $700 to Friday morning’s $21 – amid reports of alleged insider trading and large token holders exiting their positions. The tokens have a market capitalization of $5 billion as of Friday, down 72% from May′s $18 billion figure.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.