Token Migration
Token migration refers to the process of moving tokens from one blockchain to another as a result of a change in the blockchain.
What Is a Token Migration?
Token migration (also known as token swaps) occurs when a token is transferred from one blockchain to another during a blockchain changeover. It is crucial to remember that token migrations aren't always associated with new blockchain launches; they may also occur when projects simply switch from one protocol to another.
As an example,
Mithril (MiTH) was migrated from Ethereum to
Binance Chain. Because many new projects lack their own
blockchain or it is still at the development stage, they opt to
migrate their investors’ tokens from the third-party platforms to their own chains, which is when token migrations occur.
Many early crypto projects and companies used Ethereum's
ERC20 token in 2018, however, after their own blockchain was ready, tokens were migrated to their native blockchains. One
advantage of this method is that investors are not required to lock up these funds. Rather, they may trade these placeholder tokens on exchanges while new projects are developing their technology.
Token transfers from one third-party blockchain to another are also possible for technical or economical factors.
Often,
blockchain efforts begin with the release of whitepapers that promise breakthrough technologies in the future. The road from designing paper to finished product typically takes many twists and turns, and some projects substantially change their concepts, such as moving to a different blockchain.
Investors may be obliged to migrate to a cryptocurrency or token in certain situations. This necessitates shifting the balance of a token holder from one blockchain to another.
Token migration involves balance transfers of investors from their Ethereum wallets to a new compatible wallet of a certain project. Therefore, tokens actually move from one blockchain to another after the transition has taken place.
An
initial coin offering (ICO) is a
form of fundraising strategy in which a project creates a token that can be purchased by anyone who wants to participate in the business's future advancements, which are generally detailed in a whitepaper.
The ICO boom took place in 2018 on the
Ethereum network, utilizing
ERC-20 tokens. Some of these projects
suggested that the tokens purchased by investors will be used in future technologies, such as the blockchains they planned to build.
After completing their own blockchains, the projects transferred their investors' tokens from Ethereum to their own chains. This is similar to the difference between renting a car and buying the same automobile for long-term use.
The technique for moving tokens differs depending on the project. You may be needed to begin the migration on your own if you keep your tokens. This, however, does not imply that you must be familiar with the intricacies of programming. Most projects offer methods that link to your wallet address and enable you to move tokens in a matter of seconds.
If your tokens are held on a major and well-known cryptocurrency exchange, they'll probably manage the token transfer for you.
With the ongoing drive for blockchain integration and adaptability, the practice of token migrations — especially the ones that may operate on various chains — is likely to flourish and acquire popularity within the emerging blockchain ecosystem.