Cross-chain capability for decentralized finance applications (dApps) built on the Cardano network will be improved in a future upgrade.
IOG stated on Wednesday that the upgrade to Cardano would add new cryptographic primitives and promote “greater interoperability and secure cross-chain dapp development with Plutus.”
Tweets from Cardano code maintainer IOG indicate that the proposal was filed on Wednesday and will go into effect on February 11 at 0:00 UTC.
Before being released on the mainnet, the upgrade will be tested in a virtual environment replicating real-world performance.
In collaboration with @cardanostiftung, an update proposal was submitted yesterday to upgrade the #Cardano pre-production environment to protocol v8, which will take effect on Saturday, February 11, 2023 at 00:00 UTC.
— Input Output (@InputOutputHK) February 8, 2023
The upgrade is expected to improve cross-chain dApp development on Plutus, the Cardano blockchain’s smart contract platform, and offer increased cryptography features to the platform.
Software programs called cross-chain bridges make it possible for transactions to take place between different blockchains.
A feature like this on Cardano will enable developers to create programs that link Cardano with other blockchains, allowing users of those other blockchains to interact with the financial services provided by Cardano dApps easily.
Instead of using intermediaries, dApps employ smart contracts to provide users with financial services like lending and borrowing.
Users frequently use the dApp’s token or are compensated in those tokens.
Cardano-based DeFi Crosses $100M TVL
The change comes after Cardano-based DeFi applications reached an eight-month high of $100 million in total locked value (TVL) last week.
According to data from DeFiLlama, Minswap, and Wingriders make up more than 50% of this TVL.
Following the debut of the overcollateralized djed stablecoin earlier this month, interest in Cardano DeFi has increased.
Djed is backed by other tokens, as was previously mentioned, and needs to have between 400% and 800% in collateral value posted before it can be given to a user.
The algorithmic stablecoin TerraUSD, connected to the Terra system’s luna token, saw a value decline of almost 99% in May.
This overcollateralized technique would allow djed’s value to remain stable during market stress.
When owners of Cardano’s ADA cryptocurrency stake their coins to mint djed stablecoins, which bolsters liquidity for the fledgling ecosystem, Shen, the reserve token intended to support djed’s stability, earns further benefits.
As more Cardano-based applications are integrated with djed in the following weeks, the demand for Shen could rise, leading to a price hike.
Such improvements may ultimately be advantageous to the native ADA token of Cardano and the tokens of projects based on Cardano.
As of Thursday, ADA is trading at 38 cents and has a $13 billion market valuation.
As of the time of publication, neither IOG nor the Cardano Foundation has responded to requests for comments.
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