Here is a Proposal: ERC20 conversions into ADA.
- Build capabilities to convert ERC20 tokens directly into ADA
- Fund the conversions through treasury funds (we vote on projects that we want to bring in)
- Place that ADA in a smart contract to facilitate the governance of the token on Cardano
Why should we do this?
a. Captures the value of the ERC20 token and brings it directly into ADA (tx. fees, utility, etc.)
b. disperses $ADA ownership among a larger base–>increases instant adoption
c. finite ADA supply means the growth in utility by the former ERC token benefits everyone in Cardano
d. we get instant products+users without having to fund building (replicating) them, which carries risks
e. the builders of the ERC 20 token will give up their ability to print their token, which means value of the token can’t be inflated away.
This is essentially Blockchain M&A
The proposal is great and has many benefits as you’ve highlighted, wasn’t someone doing this already, and from memory someone also had this or similar on Catalyst and the comments were that it was already being built via a contract from IOG ?
Appreciate further comment, because if this isn’t already work in progress it needs to be👍
I know of ERC20 token converter, which would allow projects to be ported into Cardano. But that would just create another token on Cardano.
What I am proposing is to convert some good ERC20 tokens into ADA directly at a good exchange rate.
Almost seems too good to be true. What’s the catch? Does Cardano pick up extra risks from “bad” tokens, that is we need to choose the right ones beyond simply choosing those where the value does not subsequently decrease to zero?
not sure if i understand… with converting do you mean selling the erc20 for ADA?
I would not call it selling as we will be “swapping” the market value of the ERC20 token minus some discount for the equivalent amount issued by treasury.
It is a good way to add tokens to the system, while also aligning interests of those token holders with ADA holders.
I wouldn’t call it too good to be true as we will be paying for those tokens to transfer their value onto our ecosystem. But that payment is done only once while we get the benefits (users+network+alignment of interest with ADA holders) for as long as the project is alive. The token holders will give up their monetary control but can enjoy the benefits of being ADA holders within that smart contract. So it is a fair deal for both sides.
We, as a community, will pick which tokens are worth offering these deals to. Obviously we won’t pick the ones that have no long-term utility or a good value proposition. The funds will come from treasury.