June 17, 2021 — DeFIRE, the first decentralized smart order router for Cardano, is pleased to reveal the beta release of its wrapped ADA (ADA20) functionality, which will wrap and make Cardano (ADA), available for use as an ERC-20 token on the Ethereum network. This uses the infrastructure provided by Occam.fi’s Ethereum–Cardano bi-directional bridge. Vice versa, ETH will be made available on Cardano, a token deFIRE will aptly name Cardano native ETH, or “CNE.”
A “wrapped” token is a digital asset or token that is pegged to the value of another digital asset, which is ADA or ETH in this case. It is named as such because the original asset is put in a virtual wrapper — that is, a custodial solution enabling the tethered (or wrapped) asset to be issued on another blockchain. Wrapped tokens make it easier to use non-native assets across different platforms.
This functionality is expected to offer ADA holders a way to diversify their returns and provide a short-term alternative to staking. Over a longer horizon, with the advent of smart contracts on Cardano, deFIRE expects this functionality to facilitate the migration of liquidity towards the Cardano ecosystem, similar to how Wrapped Bitcoin (wBTC) enables the use of Bitcoin (BTC) liquidity on Ethereum in offering a wide range of decentralized finance-enabled yield-generating opportunities for ADA holders.
Mike Sober, product owner of deFIRE, said:
“Currently, ADA holders have access to just one simple method of generating rewards on their holdings, which is through staking and delegation. This promotes Cardano’s network health through proof-of-stake consensus participation and generates fairly consistent rewards at around 4-5% APY variable. However, it generally can’t match the high APY associated with other DeFi reward mechanisms such as liquidity mining, and some users may wish to use a portion of their ADA holdings for reward mechanisms with higher returns. We now make that possible through deFIRE’s wrapped assets.”
The wrapper functionality will be facilitated through deFIRE’s partners Bitcoin.com Exchange, which will provide custodial services; and Occam.fi, which will provide the bridge’s core functionality — the connectivity required to swap the assets. Bitcoin.com Exchange is a trusted execution venue and custodial provider that deFIRE has carefully selected to manage users’ ADA.
DeFIRE will act as the issuer of both wrapped assets CNE and ADA20. While this functionality is still in its beta testing phase, deFIRE’s smart contracts are currently undergoing a third-party audit by a leading blockchain security firm.
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