Blockchain Migration Is All the Rage
On April 24, Gifto announced that it’s moving house from Ethereum to Binance Chain. In doing so, it joins half a dozen other projects that have recently committed to the most talked about new blockchain in town. Blockchain migration can occur for a number of reasons, but beyond providing an instant shot of publicity, does making the move yield any long-term benefits?
Also read: Survey Shows South Koreans Increased Crypto Holdings by 64% Last Year
Tokenized Projects Can’t Stop Chain Hopping
“While we have tremendous respect for what the Ethereum community has built, it’s time for Gifto … to move to a new blockchain that better suits our aggressive plans for mainstream adoption,” reads the blog post released today by the South Korean gifting protocol. “One where the real usage and growth of the Gifto ecosystem can be shown today without incurring massive fees or slow transaction times which negatively impact user experience.”
Gifto’s reasons for moving to a faster and more payment-centric chain make sense given that its GTO token has little need for Ethereum’s smart contract functionality. The fact that Gifto was the first tokenized project to feature on Binance Launchpad meant that when the project began eyeing alternative blockchains, there was only going to be one winner. The reasons quoted for the switch – fees and network congestion – are the most commonly cited for projects jumping ship.
Impatience and Irreconcilable Differences – Two Reasons for Abandoning Chain
One of the reasons why Simple Ledger Protocol (SLP) has begun to be used for token issuance is on account of the low onchain fees and fast confirmation times that are a hallmark of the Bitcoin Cash network. While it’s early days for SLP’s tokenized ecosystem, the participation of projects such as Liberland has heightened interest. Ongoing delays to the Lightning Network have caused some cryptocurrency users to switch to Bitcoin Cash, as onchain fees for BTC have begun to creep towards the $2 mark in recent weeks. Similarly, the promise of decentralized Lightning apps – or “Lapps” – has yet to materialize, making the prospect of building on BCH seem appealing to some developers.
Aside from scalability issues, there’s another reason why projects may elect to switch blockchains: for publicity. Latching onto the coat tails of the hottest new blockchain can be a way to fleetingly revive the fortunes of a flagging project. When EOS launched in 2018, a number of ERC20 projects chose to entrust their fate to Dan Larimer’s latest creation, and promptly set about initiating token swaps. While news of a blockchain migration can inflate a token’s price, the effects are short-lived. Ultimately, it will require more than a new crypto network to generate sustained interest.
Multiple Chains Existing in Tandem
In its announcement on April 24, Gifto made no bones about its reasons for leaving Ethereum, explaining: “Let’s face it, fancy features like smart contracts are great, but when they slow down transactions and open up security vulnerabilities, they are not worth it if all you want to do is to pay cryptocurrency for a virtual gift. As consumer application developers, we should not need a sub-industry of smart contract security audit companies every time we want to add a crypto payment method to our apps.”
For outsiders, peering curiously into the world of cryptocurrency, blockchain networks and their never-ending array of token swaps and chain migrations must appear like some strange form of digital cannibalization. In addition to tokenized projects merrily chain hopping, networks themselves often begin life on a rival’s chain. EOS launched as an ERC20 token, for example, before swapping once its own mainnet was ready. Binance is currently doing the same with BNB, which is transitioning to Binance Chain.
Whereas holders of EOS ERC20 tokens were given a strict timeline in which to upgrade or risk being lumped with worthless tokens, Gifto is taking a more relaxed approach to its chain migration, and will support ERC20 and Binance Chain’s BEP2 in its wallet simultaneously for the foreseeable future. As its announcement cheerily concludes, “Welcome to the cross-chain world.”
What are your thoughts on token migrations – can they strengthen a crypto project? Let us know in the comments section below.
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