IOHK to Roll Out ‘Smart Contract Free’ Tokenization On Cardano Blockchain
IOHK, the lead developer of Cardano, announces the introduction of “smart contract-free” solutions for native tokens. The move aims to provide a cheaper, more efficient, and less complex platform for decentralized apps (DApps) than Ethereum’s ERC20 and ERC 721 tokens.
In a press release to BEG’s desks, Input Output Hong Kong (IOHK) announced a new interoperability feature on Cardano’s blockchain that allows native ‘non-smart contract’ tokens on the platform. This follows the Goguen upgrade's launch that allows the development and tokenization of assets using Cardano’s ledger.
This solution will allow other tokens to run on Cardano, opening a gateway to “unprecedented levels of interoperability for blockchain projects,” the statement further read.
The new solution is expected to roll out in the first quarter of 2021 on the Cardano mainnet, with the pre-production environment expected to launch in a few days.
In a blog post by Tim Harrison, Marketing and Communications Director at IOHK, the new solution differs from the non-native user tokens offered on Ethereum, i.e., ERC20 non-fungible ERC 721 tokens. Tokens built using the ERC20 or ERC 721 standards differ fundamentally from the Ethereum native token, Ether, the post explains.
The lack of native tokens makes the process of tokenization “inherently inefficient” as the developers need to write up custom code to build on Ethereum. This adds gas costs (needed to pay to execute the code), a layer of complexity in development, and increases the chances of bugs in the system.
With Cardano’s native tokenization solution, the unnecessary step of creating custom code for user-defined tokens will be dropped, allowing “third party tokens to operate on Cardano as if it was custom-designed blockchain for them.”
Notwithstanding, the tokens will behave similarly to Cardano’s native ADA cryptocurrency to enjoy the benefits of speed, security, and the platform's cheap transactions. However, unlike ADA, native tokens can be destroyed and minted, while ADA is the only token used for fees, rewards, or incentives.
This is expected to enhance the overall interoperability of assets across blockchains. In particular, Cardano has taken a step forward in challenging Ethereum in the decentralized finance (DeFi) space, recently announcing its first-ever DeFi project on it. Furthermore, IOHK releases over $250,000 in its Project Catalyst fund to incentivize DeFi projects building on its blockchain.