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A new cross-chain bridge connection between Ethereum and Internet Computer will make it possible to support native ERC20 tokens on the ICP network, CoinDesk wrote, citing developers behind the bridge. Definity Foundation built Internet Computer to help facilitate a decentralized web infrastructure layer. Among the renowned funds supporting it are a16z and Polychain Capital.
Bridge enables asset mirroring, multichain transfer, and more
The bridge, which is called Terabethia, enables asset mirroring, multichain transfers, cross-chain contract communication, and more. It will also make it possible for contracts on both chains to communicate as a forked version of StarkWare, an Ethereum scaling solution. Through the bridge, anyone can mirror and use any ICP asset on Ethereum and vice versa.
Bridges enable blockchains to exchange smart contract instructions, data, tokens, and more. These operate independently of the connecting blockchains’ consensus mechanisms or rules, said Harrison Hines, founder of the Web3 development studio which created Terabethia, called Psychedelic. Hines added:
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 for Ethereum long term.
What is Terabethia and what does it do?
Terabethia precedes Internet Computer’s native Ethereum integration, which will make it possible for the two blockchains to interoperate. The integration will enable smart contracts on Internet Computer to hold ETH assets on Ethereum and make calls to them. However, ERC20 assets won’t exist directly in that case. The bridge helps resolve this issue.
Creating liquidity and complementary products
The ability to port assets between Ethereum and Internet Computer can help create liquidity and complementary products for the chains’ users, such as DeFi products and NFTs. DeFi protocols rely on smart contracts to provide trading, borrowing, lending, and other financial services to users, not on third parties.
The outcome of ICP’s reverse gas model
Internet Computer launched this year. Its USP was a “reverse gas model”, which was believed to improve scalability. With this model, developers secure the funds needed to run the contracts or apps that use their gas. This fee is paid to Internet Computer.
However, the value of ICP has declined – from $700 in May this year to $28 at the time of writing. One reason involves allegations of insider trading and large holders selling and closing their positions. Internet Computer’s market capitalization has dropped by $13 billion since May.
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