<p>From the IOHK blog post: <a href="https://iohk.io/en/blog/posts/2021/05/17/bringing-erc20-to-cardano/" rel="nofollow noreferrer">Bringing ERC20 to Cardano</a></p>
<blockquote>
<p>Our ERC20 converter is a tool that will allow issuing organizations
and their users to handle ERC20 token migration to Cardano. It is
designed for token issuers (organizations that wish to enable the
migration of their tokens to Cardano), and their users (token holders)
to use the tool to move their ERC20 tokens to the Cardano network.</p>
<p>Users can convert their Ethereum tokens in just a few clicks, and when
moved across, these tokens will be ‘translated’ into a special native
token on Cardano that has the same value and works just like an ERC20.
Additionally, if the user wishes to do so at a later stage, they can
move their tokens back to the source network by burning them on
Cardano. Two-way convertibility is baked in.</p>
</blockquote>
<p>After logging into the ERC20 converter, Users must authenticate their source account via Metamask and provide their Daedelus address for token delivery.  Tokens are then migrated to to the Cardano address.  All operations on the migrated token are visible on both <em>Cardano explorer</em> and <em>Etherscan</em></p>
<p>Conversion is token specific and adding a token for conversion requires partnership to add a token to the list of tokens available for conversion.</p>

CC BY-SA 4.0
2021-05-26T09:37:51.307Z
OK, but that still doesn't explain how the conversion actually happens on a blockchain level. Metamask is just the UI. How does the conversion atomically remove an ERC20 token from Ethereum and put a matching native token on Cardano? Is it done by a central program that interacts with both blockchains? If not, how?
Joshua Chia
CC BY-SA 4.0
2021-05-26T09:49:33.447Z
It's the best answer I could come up with, not the best answer there is.  As I understand it, the Ethereum ecosystem sees it as having a Cardano address and all the ERC-20 properties.  The Cardano ecosystem sees it as a native token.  I suspect the burn process transfers it back to an Ethereum address but I couldn't confirm these assumptions.
gRebel
CC BY-SA 4.0
2021-05-26T08:13:06.287Z
2021-05-26T08:39:47.510Z
2021-05-26T08:39:47.510Z
gRebel
<p>The answer is EVM. Ethereum Virtual Machine. You should definitely look into how they work.
It works the same way centralized exchanges like Binance and CryptoCom work.</p>
<p>The coins value is intrinsically already a part of the system and the coin itself is a native token on the Cardano network regardless if its ERC-20 or not.
By using the EVM technology they can convert coins instead of wrap them by having a bridge between both networks and having a version of both ADA on ERC-20 and ETH natively on Cardanos network. Liquidity providing is how you know your coin is still your coin and because it's on the blockchain its verified by the entire network that the transaction took place for garunteed no duplication.</p>

CC BY-SA 4.0
2022-09-18T02:55:14.273Z
2022-09-18T02:57:13.170Z
2022-09-18T02:57:13.170Z
CripToeJesus
<p>Since Ethereum &amp; Cardano are distinct networks, when the ERC20 converter moves tokens between them in either direction ensuring conservation of token (the process does not destroy or create tokens), what is actually happening? Is the ERC20 converter a centralized process that operates on both networks or something more decentralized and trustless? If it's not a centralized process, I would be very interested to know how conservation of tokens is maintained considering that the two networks do not directly interact with each other.</p>

<ethereum>
How does the ERC20 converter actually work?
# How does the ERC20 converter actually work?

(Asked by: username_0 on 2021-05-20)

Since Ethereum & Cardano are distinct networks, when the ERC20 converter moves tokens between them in either direction ensuring conservation of token (the process does not destroy or create tokens), what is actually happening? Is the ERC20 converter a centralized process that operates on both networks or something more decentralized and trustless? If it's not a centralized process, I would be very interested to know how conservation of tokens is maintained considering that the two networks do not directly interact with each other.

**Tags:** ethereum

---

## 2 answers

### Answer by username_1 on 2021-05-26. Score: 2

From the IOHK blog post: [Bringing ERC20 to Cardano](https://iohk.io/en/blog/posts/2021/05/17/bringing-erc20-to-cardano/)

> Our ERC20 converter is a tool that will allow issuing organizations
> and their users to handle ERC20 token migration to Cardano. It is
> designed for token issuers (organizations that wish to enable the
> migration of their tokens to Cardano), and their users (token holders)
> to use the tool to move their ERC20 tokens to the Cardano network.
>
> Users can convert their Ethereum tokens in just a few clicks, and when
> moved across, these tokens will be ‘translated’ into a special native
> token on Cardano that has the same value and works just like an ERC20.
> Additionally, if the user wishes to do so at a later stage, they can
> move their tokens back to the source network by burning them on
> Cardano. Two-way convertibility is baked in.

After logging into the ERC20 converter, Users must authenticate their source account via Metamask and provide their Daedelus address for token delivery. Tokens are then migrated to to the Cardano address. All operations on the migrated token are visible on both *Cardano explorer* and *Etherscan*

Conversion is token specific and adding a token for conversion requires partnership to add a token to the list of tokens available for conversion.

> **Comments:**
> **username_0**: OK, but that still doesn't explain how the conversion actually happens on a blockchain level. Metamask is just the UI. How does the conversion atomically remove an ERC20 token from Ethereum and put a matching native token on Cardano? Is it done by a central program that interacts with both blockchains? If not, how?  
> **username_1**: It's the best answer I could come up with, not the best answer there is.  As I understand it, the Ethereum ecosystem sees it as having a Cardano address and all the ERC-20 properties.  The Cardano ecosystem sees it as a native token.  I suspect the burn process transfers it back to an Ethereum address but I couldn't confirm these assumptions.  

---

### Answer by username_2 on 2022-09-18. Score: 1

The answer is EVM. Ethereum Virtual Machine. You should definitely look into how they work.
It works the same way centralized exchanges like Binance and CryptoCom work.

The coins value is intrinsically already a part of the system and the coin itself is a native token on the Cardano network regardless if its ERC-20 or not.
By using the EVM technology they can convert coins instead of wrap them by having a bridge between both networks and having a version of both ADA on ERC-20 and ETH natively on Cardanos network. Liquidity providing is how you know your coin is still your coin and because it's on the blockchain its verified by the entire network that the transaction took place for garunteed no duplication.


---

