Ethereum tokens will now be available on Tezos thanks to a new development by Bender Labs. This will be done through the release of the WRAP protocol which is a bridge protocol from Bender Labs and is hoping to contribute towards a more open financial system.
What this means is that ERC-20 and ERC-721 tokens from the Ethereum blockchain can now be transferred into the Tezos blockchain as FA2 tokens. Bender Labs specializes in creating DeFi platforms and thus, WRAP acts as a decentralized bridge between various blockchains.
UnWRAPing New Concepts
The biggest benefit of this new development is that users of both platforms will be able to wrap their tokens. Wrapping, in this case, refers to getting representations of ERC-20 and ERC-71 tokens on the Tezos blockchain while still maintaining a pegged value to the original tokens.
This means that token conversions do not need to take place and instead, transactions can be carried out seamlessly. WRAP, which is the native token of the ecosystem, is both an ERC-20 and FA2 token and this makes it operable on both platforms.
According to the management of Bender Labs, the purpose of this new partnership as well as their general mission statement is to create a world in which digital assets are always interoperable and can be used across various platforms with ease.
“We’re building Bender: a self-driving bank for an open financial system because we believe that financial markets should be open, transparent, unstoppable, and rely mostly on lines of codes rather than intermediaries.,” said Bender Labs CEO, Hugo Renaudin.
Overall, the creation and use of bridge protocols will help further the goal of creating a perfectly open financial market. Current DeFi ecosystems like Ethereum have a number of issues such as the high gas fees as well as concerns about its impact on the environment. With this new development, however, Ethereum users can make use of the Tezos network which has fewer environmental issues and has lower prices.
Ultimately, bridge protocols and resources like WRAP will go a long way to further connect the cryptocurrency industry. The benefits of one blockchain can be enjoyed by the users of another with ease and without having to convert their tokens. This is not only a very innovative prospect but one that is much needed as the industry matures.