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Assume the following:

  • ERC20/223 tokens were sold to fund the creation of a new block chain based network.

  • The new network is now fully operational, and token holders can "convert" tokens into "coins" on the new network.

  • Once a token has been "converted", it becomes non-transferable in the original contract.

Would it be possible to implement such a system in a way that doesn't require human intervention and is secure and scalable?

One idea, is to define a "sink address" for tokens on the contract, then have a "daemon" watch for token transactions to that address and credit the token owners address on the new network with "coins" accordingly. The token owner would add their address on the new network to the transfer transaction as a parameter.

However, this approach seems like it would have scaling and security issues , since it depends on the "daemon" as a single point of failure.

I feel like there has got to be a better way to do this.

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You can use a centralized conversion server as suggested in your question.

In the future you may be able to use interblockchain transfer solutions

  • Cosmos

  • Polkadot

Any single server scales more TX output than a blockchain alone. However, it is a centralized point of failure.

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