One of the latest innovations in the crypto ecosystem is Wrapped XRP which offers a new way to use and utilize XRP in the wider blockchain ecosystem. Understand in more detail what Wrapped XRP is, how it works, and its impact on the crypto ecosystem.
What Is Wrapped XRP?
Wrapped XRP, or often called wXRP, is a digital representation of
This allows XRP, a popular digital asset, to interact with applications and smart contracts on other blockchain networks that support a particular token standard.
Despite its many benefits, using wXRP also comes with certain challenges and risks. One of them is the need to trust the wXRP service provider, which is responsible for managing wXRP-enabled XRP reserves. Additionally, there are also technical and security risks that need to be considered.
How Wrapped XRP Works
The process of wrapping XRP into wXRP begins with sending XRP to the address specified by the wXRP service provider. After receiving the XRP, the service provider then issues the corresponding wXRP to the user's wallet address.
Each wXRP issued is backed by a corresponding amount of XRP in the reserve, ensuring always equal bonding.
Benefits and Uses of Wrapped XRP
First of all, Wrapped XRP allows XRP to be integrated into broader blockchain ecosystems, such as DeFi (Decentralized Finance), exchange markets, and other applications that utilize blockchain technology. This expands the functionality and utility of XRP, providing greater flexibility to asset holders.
Additionally, by participating in the DeFi market powered by wXRP, users can take advantage of its liquidity and earn returns through various financial products, such as loans, staking, or cryptocurrency exchanges. This opens up new opportunities for investors and traders to optimize their profit potential.
Also Read: XRP Whales Move Tens of Millions of XRP As Price Approaches $0.6
How to Wrap and Unwrap XRP
Wrapping and unwrapping XRP involves a conversion process between the original XRP and its representation in the form of a token that conforms to a particular token standard, such as ERC-20 for Ethereum. Following are the general steps for wrapping and unwrapping XRP:
1. Cara Wrap XRP
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Select Service Provider
We need to choose a service provider that supports wrapping XRP into a suitable token. Make sure to choose a provider that is trusted and has a good reputation in the crypto ecosystem.
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Crimea XRP
Send the amount of XRP you want to wrap to the address specified by the service provider. Be sure to check and confirm the address carefully to avoid errors in delivery.
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Transaction Verification
After sending XRP, you need to wait until the transaction is confirmed by the relevant blockchain network. This usually takes a while depending on the network traffic and transaction fees you set.
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Receive Wrapped Tokens
Once the transaction is confirmed, the service provider will issue wrapped tokens corresponding to the amount of XRP you sent. This token will represent your real XRP in a transferable form on the relevant blockchain network.
2. Cara Unwrap XRP
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Select Service Provider
We need to choose a service provider that supports the XRP unwrapping process, usually from wrapped tokens to real XRP. Make sure to choose a trusted and safe provider.
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Send Wrapped Tokens
Send the wrapped token back to the address specified by the service provider. Make sure to carefully check the destination address to avoid errors in delivery.
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Transaction Verification
Wait until the transaction is confirmed by the relevant blockchain network. This ensures that the unwrapping of XRP has been successful and your original XRP will be returned to your wallet.
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Receive Original XRP
Once the transaction is confirmed, your original XRP will be sent back to your wallet and you can use the XRP according to your needs in the crypto ecosystem.
How Wrapped XRP Works
Here's how wrapped XRP (wXRP) works
1. Genuine XRP Delivery
The process begins with the user sending a certain amount of XRP from their wallet to the address specified by the wXRP service provider.
2. XRP Locking and Token Creation
After receiving XRP, the service provider then “locks” the appropriate amount of XRP in their reserves. Next, they issue the appropriate amount of wXRP to users, which represents their original XRP holdings.
3. Tokenization of XRP
wXRP is issued in the form of tokens that comply with the token standards used in the relevant blockchain network. For example, if wXRP is used in the Ethereum network, the token will be converted into an ERC-20 token.
4. Use in the Blockchain Ecosystem
Once wXRP tokens are issued, users can use them in various applications and smart contracts that support those tokens on the relevant blockchain network. This includes participation in DeFi markets, crypto exchanges, staking and more.
5. Storage and Recovery
Even though wXRP operates on various blockchain networks, the corresponding amount of XRP is still held in reserve by the wXRP service provider. Users can always exchange their wXRP back to real XRP by performing an “unwrapping” process through the same service provider.
Also Read: Ripple vs SEC: Ripple Fights Additional SEC Claims with New Evidence
Why Do We Need Unwrapped XRP?
We need Wrapped XRP (wXRP) because it provides several important benefits in the crypto ecosystem. Here are some reasons why wXRP is necessary.
1. Interoperability
XRP is a popular digital asset, but it mostly operates on the XRP Ledger blockchain network. With wXRP, XRP can be “wrapped” and integrated into other blockchain networks that support certain token standards, such as ERC-20 for Ethereum. This allows XRP to interact with applications and services across various blockchain ecosystems.
2. Access to DeFi and the Ethereum Ecosystem
DeFi (Decentralized Finance) has become a dominating trend in the crypto ecosystem, especially on the Ethereum network. With wXRP, XRP holders can access a variety of DeFi applications and services, such as lending, exchange, staking, and others that support ERC-20 tokens.
3. Liquidity and Asset Utilization
By participating in the DeFi market powered by wXRP, users can leverage the liquidity of their assets and earn returns through various financial products. This allows XRP holders to optimize their profit potential in a way that was previously unavailable.
4. Flexibility of Use
wXRP users have the flexibility to choose how they use their assets across various blockchain platforms and applications. This includes cryptocurrency exchanges, investments, payments, and more, depending on the user's individual preferences and goals.
5. Opening New Access
By enabling XRP to be integrated into the broader blockchain ecosystem, wXRP opens the door to new possibilities and increases the adoption of XRP globally. This helps expand XRP's utility and strengthen its position as a premier digital asset in the crypto ecosystem.
Is Wrapped XRP (wXRP) the same as XRP?
Wrapped XRP (wXRP) is not the same as native XRP, although the two are closely related. Native XRP is a digital asset that operates on the XRP Ledger blockchain network, while wXRP is a digital representation of
The main differences between the two are as follows.
1. Platforms and Standards
The original XRP operates on the XRP Ledger blockchain network, while wXRP operates on other blockchain networks that support certain token standards, such as ERC-20 for Ethereum. This means that wXRP can interact with applications and services across different blockchain ecosystems that support the same token standard.
2. Attachment to Native XRP
Although wXRP represents real XRP in the form of a transferable token, wXRP is not identical to real XRP physically. Each issued wXRP is backed by a corresponding amount of XRP in the reserve, but they remain a distinct digital representation of the original XRP.
3. Function and Use
The native XRP functions as a digital asset that can be used for a variety of purposes, including cross-border payments, cross-currency liquidity, and instant payment solutions. On the other hand, wXRP can be used in various applications and services in various blockchain ecosystems that support the token, such as DeFi, crypto exchanges, and others.
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Read Also:
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DISCLAIMER: This article is informational 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.
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