By Karina Rafaella

Crypto networks have different inherent properties, with dApps and tokens built on top of them. By having interoperability between crypto networks, new and exciting use cases can be unlocked. 

On Hedera, a new type of distributed public network which is built using Dr. Leemon Baird’s hashgraph algorithm, assets can be bridged in from other public networks and vice versa using the hashport bridge.

In this guide, you will learn about Hedera’s growing decentralized finance (DeFi) ecosystem as well as how to port Ethereum ERC-20 tokens into the Hedera network via hashport.

Understanding Crypto Bridges

Interoperability continues to grow in importance as the broader crypto ecosystem evolves. 

Being able to move and use digital assets from one network on another provides a number of benefits for networks and their users. Bridges make it fast and simple for users to move tokens between different crypto protocols without having to liquidate them. As such, bridges play a vital role in DeFi, unlocking new liquidity for emerging networks as people are no longer tied to any one in particular.

Decentralized bridges enable the “transfer” of assets from one network to another by freezing or locking the native assets on their original network through a smart contract and creating equivalent tokens on the receiving network. 

For example, when you transfer tokens from Ethereum to Hedera, you might notice the tokens you held on Ethereum are now representative or “wrapped” Hedera Token Service (HTS)  tokens on the Hedera Public Network. Since tokens from different distributed networks are not compatible with one another, wrapped tokens are created to represent these assets on foreign networks, giving them the functionality of the destination network they reside on. 

The DeFi Ecosystem on Hedera

DeFi consists of financial applications built on distributed ledger technologies through smart contracts. Without the same intermediaries and gatekeepers as the traditional finance world, more people can access financial products and services which were once only available to a select few.

DeFi projects were first developed on the Ethereum blockchain. However, DeFi has since expanded to many other networks including Hedera. 

Since Hedera is compatible with the Ethereum Virtual Machine (EVM),  interoperability solutions such as hashport can unlock additional functionality and liquidity for Hedera’s growing DeFi ecosystem. 

In March 2022, the HBAR Foundation announced a $155 million USD Crypto Economy Fund dedicated to DeFi development on the Hedera hashgraph. The fund is expected to fuel the growth of DeFi projects such as decentralized exchanges, lending and borrowing protocols, prediction markets, asset management platforms, bridges, and more.

The fund has already introduced liquid staking to the Hedera ecosystem with Stader Labs. Since then, the fund has also been supporting projects that are creating the infrastructure for a thriving DeFi ecosystem on Hedera. 

Hashport will provide a fast and secure conduit for users of many of the most popular DLT networks to easily migrate their assets onto the network in order to partake in its DeFi ecosystem. Once across, users will have access to the DEXs being developed on Hedera such as SaucerSwap and HeliSwap (backed by MantraDAO) where they can interact with these platforms using their newly ported assets.

What Is hashport?

Hashport is the enterprise-grade public utility that facilitates the movement of digital assets between distributed networks, extending their functionality in a quick, secure, and cost-effective way. In order to remain platform-neutral, hashport functions without the use of a proprietary token. 

The network is built on a robust and performant architecture, secured and operated by a group of industry-leading validator partners from around the world. hashport has passed a rigorous security audit and follows industry best practices; regularly performing comprehensive network tests to ensure the integrity of the network.

Recently, hashport announced the integration of popular tokens. Currently, hashport allows users to port fungible tokens across Hedera, Ethereum, and Polygon. Tokens include $HBAR, $ETH, $MATIC, $DOV, $CLXY, $JAM, $DAI, $LINK, $USDT, $USDC, $wBTC, and $AAVE.

These token integrations enable Ethereum-based tokens, also known as ERC-20 tokens, to interact in the expanding Hedera DeFi ecosystem as Hedera tokens (HTS Tokens). This means that ERC-20-based assets can leverage the efficiencies of the Hedera network. 

To remain platform-neutral, hashport does not have a native protocol token. Since hashport is decentralized, you are always in control of your assets and accounts. 

Hashport is a two-way portal, which means you can port tokens from Ethereum to Hedera and vice versa. Each transaction has a flat 0.5% service fee which is paid in the same token that is being ported.

If you have a Hedera wallet (eg. HashPack) and an Ethereum wallet (eg. MetaMask), you can use hashport to bridge tokens from networks such as Ethereum and Polygon, into the Hedera Public Network. 

How Secure Is the hashport Portal? 

The hashport network is secured through the use of the Hedera Consensus Service (HCS) and validator partners from around the world. 

These validator partners are referred to as a validator swarm, consisting of 9 decentralized organizations. These organizations are industry-leading partners who are committed to maintaining the integrity of the hashport network. 

Through the Hedera Consensus Service, transaction requests on the hashport platform are logged by the validator swarm with 100% immutability and are final. 

Hashport regularly undergoes audits and security reviews to adhere to industry standards. Hashport has also passed a rigorous audit from Omniscia, a  highly regarded smart contract auditor team. 

Getting Started on hashport 

Before you port your tokens, make sure to use a Chromium-based browser (eg, Chrome or Brave) and have your Hedera and Ethereum wallets ready. If you are porting assets from Hedera to Ethereum, ensure that your Ethereum wallet has enough ETH for gas fees to process the transaction. For a brief video walkthrough of the hashport platform please see here.  

From the hashport web app, connect your MetaMask wallet by selecting “Connect Accounts”. Once you connect your MetaMask wallet, a green dot beside the MetaMask logo should signify a successful connection.

Next, connect your existing Hedera wallet by importing your private key. Your private key can come in the form of a seed phrase (mnemonic phrase) and keystore file. Prepare the written copy of your seed phrase from when you first set up your wallet. If you do not have access to your written seed phrase, you can access your private key and seed phrase from the Hedera wallet on your browser extension.

If you are importing your Hedera wallet by using your seed phrase, select the number of words included in your seed phrase, then type your seed phrase in the correct order.

Once you load your Hedera wallet, a pop-up will appear with your Hedera public key and account ID. If one of the fields is missing information, this means your wallet was not loaded successfully and you will have to import it again.

Before you port your assets, you should see both your Ethereum and Hedera accounts at the top of the hashport webpage.

To begin porting, select a token you would like to bridge from a list of assets provided. You can select an asset from the Ethereum, Polygon, or Hedera network.

Once you’ve reviewed your transaction, proceed by clicking “Port”. A receipt of your transaction with a breakdown of the fees will be available for you to approve. Proceed by clicking “Continue”.

Review and accept the terms and conditions by typing “I understand” in the form. Do not refresh the page or close the tab while your transaction is being processed, as you could permanently lose your funds.

Once your transaction is successful, finish the process by clicking “Complete” and you will be able to view your representative HTS tokens in your Hedera wallet.

Congratulations! You’ve successfully bridged your assets from the Ethereum blockchain to the Hedera network. You can use your ported ERC-20 tokens to access Hedera’s growing DeFi ecosystem and do more with your assets. 

The hashport bridge also allows for the porting of NFTs between supported networks. You can use your ported Hedera NFTs on different Ethereum dApps and Web3 sites that support NFTs. Since hashport is a two-way bridge, you can port your assets back to the original network following the same process above. 

Bridging Opportunities

One of the biggest challenges in crypto is the lack of interoperability between networks. By default, crypto networks are isolated environments because of the different sets of rules and consensus mechanisms in place. 

By achieving interoperability through bridges, people and industries can maximize the potential of each crypto network effortlessly and effectively. Bridging services like hashport close the gap between distributed ledger networks, contributing to the growth of the crypto economy as a whole and bringing vibrant crypto communities closer together.

What are your thoughts on crypto interoperability and Hedera’s DeFi ecosystem? 

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