deFIRE to issue Wrapped tokens for ADA (ADA20) and Ethereum (CNE) 🔥🔥🔥

The deFIRE team is pleased to reveal the beta release of our wrapped ADA (ADA20) functionality, which will wrap and make ADA available for use as an ERC-20 token on the Ethereum network, using the infrastructure provided by the Occam.fi Ethereum <> Cardano bi-directional bridge. Vice versa, ETH will be wrapped and made available on Cardano, a token we will aptly name Cardano Native ETH, or ‘CNE’.

DeFIRE will act as an issuer of both wrapped assets (i.e. CNE and ADA20). While this functionality is still in its beta testing phase, we are pleased to reveal that our smart contracts are undergoing an audit by one of the major security firms in the space. We will reveal further details and public audit results soon.

What are wrapped tokens?

A ‘wrapped’ token is a digital asset or token that is pegged to the value of another digital asset, in this case ADA or ETH. It is called a ‘wrapped’ token as 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. There’s a great introduction to wrapped asset’s on Binance’s Academy, which you can read here. Wrapped ADA is being made available as part of the Ethereum <> Cardano bi-directional liquidity bridge, which arrives to the deFIRE and Occam.fi ecosystem today! Let’s discover why wrapped ADA is important for our ecosystem.

Why is the wrapper needed? What are the use cases?

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, we expect this functionality to facilitate the migration of liquidity towards the Cardano ecosystem, similar to how wBTC enables the use of Bitcoin liquidity on Ethereum—offering a wide range of DeFi-enabled yield generating opportunities for BTC holders.

Currently, ADA holders have access to just one simple method of generating rewards on their holdings—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 holdings for reward mechanisms with higher-returns.

The wrapper functionality will be facilitated through deFIRE’s partners Bitcoin.com Exchange, who will provide custodial services; and Occam.fi who will provide the bridge core functionality—the connectivity required to swap the assets. Bitcoin.com Exchange is a trusted execution venue and custodial provider who we have carefully selected to manage users ADA.

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