Dogecoin (DOGE) announced its plans to release the Dogecoin and Ethereum tokens bridge on September 5 2018.
Dogecoin is currently making major developments within its infrastructure to improve token liquidity. The crypto project which uses the ‘dog meme’ logo started off with an aim to capture the fast growing crypto & blockchain market. As of today, Dogecoin developers are working on ‘Dogethereum’, a smart contract that will facilitate the transfer of Dogecoins to and from the Ethereum chain. Basically, the protocol acts as a bridge between Dogecoin crypto coins and the Ethereum network!
Why ‘Dogethereum’ is a big Milestone
This link between Dogecoin and Ethereum will increase the scalability of both crypto projects. However, Dogecoin stands to benefit more given an increased scope of its operations once the demo is released in September 2018. Ideally, Ethereum is flexible with both tokens and bridge tokens coded as smart contracts for specific purposes.
Dogecoin will benefit from Ethereum’s stable liquidity and less volatility once its ‘Doge/Ethereum’ link is complete. This is mainly because the Doge ecosystem will be more integrated with services offered by Ethereum on its On-Chain.
With the increase in crypto-oriented projects, teams are now focusing on their competitive edge to survive the volatile market in case of price correction in future. Therefore, developed protocols and platforms like the Dogecoin must have an aspect of practicality in the real world. Dogethereum will work pretty much like how casinos work with the poker chips; exchange the DGD tokens for a different coin built within Ethereum for use and exchange back the remaining amount to DGD once you’re through.
The ‘Dogethereum’ bridge raises a question on maintaining the decentralized aspect of digital coins. In casinos, single parties can carry out the transactions of exchanging money for poker chips and vice versa due to trust established through physical presence. This cannot be the case for digital currencies hence the need for coded ‘smart contracts’ on Ethereum’s platform to act as intermediaries.
In this case, the smart contracts will be the base for issuing and acquiring DGD tokens from interested clients. Dogoecoin has an existing contract for Bitcoin operating in a similar manner as the ‘Dogethereum’ although it doesn’t make economic sense. Retrieving the DGD tokens back is an issue due to a costly and hard validation process
In Bitcoin’s Ethereum smart contract infrastructure the BTC are burnt and eventually sent to an address that cannot be recovered. The ‘Dogethereum’ bridge will however be more advanced since the DGD tokens will only be locked when they are being used and unlocked later to receive the remaining coins. What this means for the protocol is that a third party ‘operator’ will be in charge of validating the smart contract requests for a smooth liquidity flow.
Dogecoin community is looking forward to the release of Dogethereum demo expected a week from now. This will be presented before judges who will then decide whether the development bounty was put to good work in this milestone. If all goes well then the team will pay the developers for advancement of the milestone.
The progress on this milestone is still a work in progress before the Dogecoin community get to consume the product. A couple of developments still have to be made to achieve the desired user experience level. For this purpose, Dogecoin has set aside a good portion of its funds to pay for development of nodes linking the ‘Doge/Ethereum’ bridge.
As it stands, the bridge will probably require participants to run more than one wallet at the same time, an inconvenience to simplicity. Alternatively, the team is working to make it possible for the exchange to take place on a coin exchange directly. The ‘Dogethereum’ bridge will therefore act as a balance between native DGD tokens and the ones on Ethereum edge out arbitrage.