While it may still be the primary network hub for defi activities, smart contracts, and NFTs, bridges built using competing networks like Tezos could pose a serious challenge to Ethereum’s market share in these areas.
New Solutions to Old Problems Could Undermine Network’s Potency
In the time since the network’s unveiling, Ethereum-killers have abounded with claims that they would displace the network with faster transactions, more scalability, lower fees, and effectively do just about everything better.
Despite all the hype surrounding these answers to Ethereum’s flaws, no network has been able to displace the network’s appeal in totality. Yet, Ethereum’s deficiencies are currently coming under attack from all sides, and more so than ever before.
The recently unveiled WRAP Protocol from Bender Labs is one of several arrows that could seriously maim Ethereum’s status. This highly interoperable decentralized protocol will enable the transformation and transfer of Ethereum tokens, including ERC-20 and ERC-721 standards, to the Tezos blockchain.
Ethereum tokens are effectively locked on the blockchain through this protocol before a “wrapped” version is created on the corresponding network, in this case, Tezos. The wrapped version’s underlying value is tied to the actual token being copied, using the $WRAP native token to orchestrate the transformation. All wrapped Ethereum tokens are then compatible with Tezos’ FA2 standard, allowing them to be freely used within the network.
A Serious Challenge to the Status Quo
While defeating Ethereum isn’t Bender Labs stated objective, the idea of building a more open, interoperable decentralized financial system does challenge the network’s dominance, especially in Defi and smart contracts.
This new protocol’s “bridge” will empower token holders to move freely between the two ecosystems with minimal switching costs, providing a greater abundance of choice while…