What is wETH (Wrapped Ethereum) and How Does It Work?

Wrapped Ethereum (wETH) is a tokenized version of Ether (ETH) that follows the ERC-20 technical standard. wETH has a value that is always equal to ETH.

These tokens can also be exchanged back for ETH at any time through a process called “unwrapping”. wETH is used to enable additional functionality on dApps (decentralized applications), such as creating offers or bids.

What is wETH?

wETH is an example of a wrapped token, namely a token that represents another crypto asset that has the same value as the original asset. Wrapped tokens can improve interoperability between different blockchains and platforms.

For example, Bitcoin (BTC) also has a wrapped version called Wrapped Bitcoin (WBTC), which can be used on the Ethereum network.

This article will discuss what wETH is, why wETH is needed, and how to use wETH.

Why is wETH Needed?

wETH is needed because ETH and ERC-20 tokens are not fully compatible with each other. ETH is the native token of the Ethereum network, which is used to pay gas fees (fees) for running dApps and smart contracts on the blockchain.

ERC-20 tokens are tokens created by projects on the Ethereum network, which follow certain technical standards to facilitate exchange and integration with dApps and crypto wallets.

However, ETH and ERC-20 tokens do not follow the same rules, because ETH was created before ERC-20 was implemented as a technical standard. As a result, ETH cannot be exchanged for ERC-20 tokens directly, and vice versa.

This can make it difficult for users who want to participate in DeFi (decentralized finance) activities involving ERC-20 tokens, such as lending, borrowing, swapping or farming.

To solve this problem, the Ethereum network introduced wETH, which is the ERC-20 version of ETH. With wETH, users can exchange their ETH for ERC-20 tokens, and vice versa, easily and quickly.

wETH also allows users to use their ETH on platforms that only support ERC-20 tokens, such as Uniswap, Compound, or Aave.

How to Use wETH?

To use wETH, users must convert their ETH to wETH first. This process is called “wrapping”, which means packaging ETH to the ERC-20 standard. Wrapping can be done via platforms such as WETH.io, MetaMask, or CoinGecko. Wrapping usually requires a gas fee, which is paid in ETH.

Once ETH is converted into wETH, users can use their wETH for various purposes, such as:

• Making offers or bids on platforms like OpenSea, which is a marketplace for unique and rare digital assets, such as collectibles, games, or art.
• Participate in DeFi activities, such as lending, borrowing, swapping, or farming, on platforms such as Uniswap, Compound, or Aave.
• Providing liquidity to liquidity pools, which are places where users can exchange crypto assets without intermediaries, on platforms such as Uniswap, SushiSwap, or PancakeSwap.

If users want to convert their wETH back into ETH, they can carry out a process called “unwrapping”, which means releasing wETH from the ERC-20 standard.

Unwrapping can also be done via the same platforms as wrapping, and also requires gas fees.

Conclusion

wETH is a tokenized version of ETH that follows the ERC-20 technical standard. wETH has a value that is always equal to ETH, and can be exchanged back for ETH at any time.

wETH is used to enable additional functionality on dApps, such as creating offers or bids.

wETH is needed because ETH and ERC-20 tokens are not fully compatible with each other. With wETH, users can exchange their ETH for ERC-20 tokens, and vice versa, easily and quickly.

wETH also allows users to use their ETH on platforms that only support ERC-20 tokens, such as Uniswap, Compound, or Aave.

To use wETH, users must convert their ETH to wETH first. This process is called “wrapping”, which means packaging ETH to the ERC-20 standard.

Wrapping can be done via platforms such as WETH.io, MetaMask, or CoinGecko. Once ETH is converted into wETH, users can use their wETH for various purposes.

Some of the purposes include, making offers or bids on OpenSea, participating in DeFi activities on Uniswap, Compound, or Aave, or providing liquidity to liquidity pools on Uniswap, SushiSwap, or PancakeSwap.

If users want to convert their wETH back into ETH, they can carry out a process called “unwrapping”, which means releasing wETH from the ERC-20 standard. Unwrapping can also be done via the same platforms as wrapping.

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To be able to buy crypto assets on Bittime , make sure you have registered and completed identity verification. Apart from that, also make sure that you have sufficient balance by depositing some funds into your wallet . For your information, the minimum purchase of assets on Bittime is IDR 10,000. After that, you can purchase crypto assets in the application. 

Monitor price chart movements of Bitcoin (BTC) , Ethereum (ETH ), Solana (SOL) and other cryptos to find out today's crypto market trends in real-time on Bittime.

Read also:

Understanding Ethereum Transaction

What Is Ethereum Difficulty?

What Is Ether?

Celsius Plan to Unstake ETH: Impact on the Market and Future Ethereum Price Predictions

DISCLAIMER: This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.