Cryptocurrencies are getting more sophisticated with each passing day. This is because there is immense innovation in the field. Researchers all over the world are putting their best to figure out the best innovation in the field. These innovations have transformed the arena of cryptocurrencies.

The constant innovation has been the driving force behind the success of these currencies in the international arena. It is generally believed that cryptocurrencies are the future currencies of the world.

Cryptocurrencies were introduced back in the early 2000s. At the start, these currencies were extremely easy to mine. Everyone with a simple computer could mine these currencies. However, with time, the awareness of cryptocurrencies increased among the masses. Due to this, the demand for cryptocurrencies increased and hence the price skyrocketed.

The sudden price hike resulted in an unprecedented boom in the crypto economy. The crypto market became flooded with the inflow of cash from all over the world and the total capital of cryptocurrencies crossed trillions of dollars.

Bitcoin or BTC is the first cryptocurrency to reach a market capitalization of over one trillion dollars. The success of the crypto market largely depends upon the price of BTC. If there is an increase in the price of BTC, the crypto market surges and if the price falls, the entire market sees a downfall in prices.

Ethereum or ETH is the next most important and largest traded cryptocurrency after BTC. ETH is based on state-of-the-art blockchain technology. The underlying technology used in the ETH blockchain makes it unique from other currencies. This is the reason that the ETH holds the record of the second most precious currency with the second largest market capitalization.

The ETH developers have developed another version of Ethereum, which is an improvement on the existing one. It is called ERC-20 technical standard. This version of Ethereum is even better than the last one. The international standard of Ethereum is already very high because the blockchain of ETH is very safe and secure.

The underlying technology used in the ERC-20 technical standard is even better than the previous version. The new version makes sure that the bugs and some minor mistakes of the previous version are removed.

The new version offers better stability to the coin. The users of the ERC-20 technical standard are already aware of this fact. The ERC-20 technical standard is easy to trade and it is relatively more stable than the previous version of ETH. Moreover, it is safer and more secure than the last version of ETH.

However, there is one catch. ERC-20 cannot be traded with regular ETH. To solve this issue, wrapped Ethereum or wETH has been introduced. wETH is an improvement on the already existing ERC-20. It is tradable and compatible with the version of ETH. Moreover, it can also be used to interact with other assets containing ERC-20.

ERC-20 has become the industry norm for use in Ethereum-based projects. People from all over the world are using ERC-20 in Ethereum-centered projects. This is because the ERC-20 is extremely practical to use.

Moreover, it is transparent and flexible to use. The flexibility and transparency have enabled it to become the industry leader. Traders from all over the world who are familiar with the Ethereum network use ERC-20 due to the flexibility and transparency of its blockchain.

Various online wallets and exchanges support ERC-20 tokens. This list includes various decentralized applications commonly known as DApps. The use of these applications allows ERC-20 to be traded worldwide without any issues. The inclusion of ERC-20 in these online platforms enables traders to trade volumes of ERC-20 without any difficulty.

However, there is one issue: ETH and ERC-20 are not based on the same set of rules. This means that ERC-20 and ETH do not follow the same rules. This is because ETH was created way before ERC-20. This means that the ETH was already in use way before ERC-20 was implemented as a technical standard.

The question that arises is why the wETH matters. This is because the blockchain of ERC-2 is designed in such a way that a person can trade ERC-20 tokens only with the other such tokens. This means that these tokens cannot be traded with other ETH tokens. Although the same network designs both tokens, they can’t be traded with each other. This is the issue that rises with the ERC-20 and ETH coins.

To solve this issue, wrapped Ethereum or wETH was introduced by the world’s second-largest blockchain network. This coin nudges the gap between the ETH and ERC-20. This means that wETH can be traded with ETH as well as ERC-20. This coin was introduced as a bridge between ETH and ERC-20.

What is wrapped Ether (wETH) ?

As mentioned above, wrapped Ethereum is a version of Ethereum. It is a modern and more practical version of Ethereum. The developers of the ether network have upgraded the underlying technology of the ether. The improvements made in the blockchain of ether networks paved the way for wrapped Ethereum.

Wrapped Ethereum is named in such a way that it conveys the meaning of the term. The name means that Ethereum is wrapped with ERC-20 tokens in such a way that these coins become compatible with trading with other Ethereum coins.

Moreover, wrapping doesn’t mean that the coin loses its value or anything. On the contrary, the wrapped coins and the original tokens have the same value as the underlying assets.

Another question that arises is whether these wrapped Ethereum tokens are safe to use or not. The answer is yes. This means that these tokens are safe to use and they offer secure transactions to customers all over the world. This is because the underlying technology of the ETH and wETH is the same. Moreover, the security protocols in wrapped Ethereum are even better and improved than ETH.

Moreover, the developers of wrapped Ethereum have made sure that the blockchain technology of wrapped Ethereum offers safe and secure transactions to its customers. Ether network has pledged the price of both tokens in the ratio of1:1.This means that the price of ETH and wETH are the same.

Both coins can be used interchangeably. There is no price difference between the two coins. You can hold both of these coins at the same price. The only difference between the coins is their use cases and their interchangeability with some older coins like BTC.

The concept of wrapped tokens is the same as stablecoins. This means that the wrapped tokens can be considered stablecoins. This is because the underlying technology of the wrapped coins is designed in such a way that the value of these coins remains at a relatively stable place as compared to other cryptocurrencies.

For better understanding, you can think of stablecoins as ‘wrapped USD’. As the price of USDT coin is pegged to US dollars, in the same way the price of wrapped coins is usually pegged to an underlying asset.

This asset protects against the sudden drop in the price of the currency. This also helps to control the volatility associated with these currencies. This enables the customers to use these currencies as fiat currencies.

The use of wrapped currencies is becoming the new normal. Bitcoin also has a wrapped version. It is called wrapped bitcoin. The value of wrapped bitcoin is also pegged to the BTC in the ratio of 1:1.

This means that the price of wrapped BTC is the same as the regular BTC. Various other networks follow the same process. These networks include Avalanche and Fantom. These currencies also provide the wrapped version of their currencies.

If one wishes to unwrap the Ethereum token, it can be done. This means that the wrapped Ethereum coins can be unwrapped. The process of unwrapping the wrapped coins is simple. One simply has to send the wrapped Ethereum to the ether network and they in return will send back the unwrapped coins to the user.

This process takes some time but the amount of Ethereum sent back by the network is the same as the amount of wrapped Ethereum sent. This means that the network charges no fee from the user and the user can get the unwrapped version of ether without paying any dues.

The greatest advantage of wrapped coins is that these coins are extremely easy to use. The issue with regular coins is that these coins cannot be used interchangeably. This means that the coin of one network cannot be used on the blockchain of another network.

Normally, one cannot use either on the BTC blockchain network or Avalanche on the LUNA network. Each coin can only be used on its network with its protocols. This is where the concept of wrapped coins comes into play.

Wrapped coins can be used on any network. The process of wrapping converts the underlying coins into tokens and then these tokens are wrapped with the standard of certain other blockchains.

This means that the wrapping allows a certain token to become able to be used on another blockchain without any issue. With this technique, wETH can be used on the BTC blockchain, LUNA blockchain, or any other blockchain without any trouble.

Methods to Wrap Ethereum

There are various methods to wrap Ethereum. One of the methods mentioned before is where one can send the unwrapped Ethereum to the ether network and in return, the network sends the wrapped Ethereum to the customer.

The amount of wrapped Ethereum sent to the customer is the same as the amount of unwrapped Ethereum sent to the network. Moreover, there is another way in which wETH can be swapped with another token via an exchange.

There are three ways to exchange ETH with wETH. These methods are given below:

• Wrapping ETH by using OpenSea

ETH can be wrapped by using the OpanSea platform. This is done by using the wETH smart contract. To convert ETH to wETH by using the OpenSea platform, first, you need to open the application on your desktop or computer. Once the application is open, then click on the button named  “wallet”. It is located in the top-right corner of the application.

Then click on the three dots next to the ETH icon. After this, click on the option of “Wrap”. After this step, you will need to enter the value of the ETH that you want to wrap. Make sure that you have entered the right amount of Ethereum and After entering the amount, click on “Wrap ETH”.

Then you will see a MetaMask pop-up on your screen. It will prompt you to sign the transaction. Afterward, a confirmation message will appear on the screen once the system is done with the process of wrapping. This is the final step that you need to undertake to convert your ETH into wETH.

After the confirmation message, the converted wETH will appear in the wallet portion of your OpeanSea account. The converted wETH will appear with a pink diamond ETH logo, this will extinguish it from the regular ETH.

• Wrapping ETH by using Uniswap

ETH can be also converted into wETH by using the platform Uniswap. First of all, you need to connect your online wallet with Uniswap and you need to make sure that you have selected the Ethereum network. Uniswap offers various crypto networks for swapping. Therefore, you need to make sure that you have selected the right network.

After selecting the Ethereum network, click on the “select token” button located at the bottom of the screen, then select wETH from the list of options displayed. Now you need to enter the amount of Ethereum that you wish to wrap and then click “Wrap”.

After selecting this option, you need to verify the transaction from your crypto wallet. Once you’re done with the verification process, gas fees will be deducted from your account, the wrapped ETH will be transferred to your account.

• Wrapping ETH by using MetaMask

To use this platform, first of all, you will need to link your wallet to this platform. Then make sure that you have selected the correct network. In this platform, you need to select “Ethereum Mainnet” as your network. Then click on “swap”. After this, you need to click on the option “wETH’. Next, you need to put the amount of Ether that you are looking to convert into wETH.

After this, click on “Review Swap”. After this step, you will see a screen that displays the conversion rate. This rate will be 1:1. To wrap your ETH, you need to click on “Swap”. After clicking on the button, your amount of ETH will be converted into wETH.

How to unwrap ETH?

Unwrapping ETH is also an easy process. It can be done manually by interaction with a smart contract. The process of unwrapping ETH is the same as the process of wrapping it. In the OpenSea platform, all you need to do is instead of clicking on “Wrap ETH”, you need to click on “Unwrap ETH’.

The conversion rate is the same as unwrapping ETH. The conversion rate is usually 1:1 which means that it doesn’t matter if you wrap or unwrap the ETH, you will get the same amount of ETH in return that you put in.

The same is the case with Uniswap or MetaMask. You can use these platforms to unwrap your ETH. You will need to give access to your wallet to these platforms. The only difference will be that you need to change the option that you are selecting from “wrap” to “unwrap”. By following this process, you can easily convert your ETH into wETH or vice versa.

Risks associated with using wrapped tokens

Although there are various advantages of wrapped tokens, there are certain disadvantages as well. According to the co-creator of the Ethereum blockchain, the main disadvantage of wrapped assets is that they are sensitive to centralization.

Since the wrapped coins are not based on the main blockchain, they are prone to outside manipulation and abuse. The main essence of cryptocurrencies is that these are decentralized and if this quality is compromised, then it becomes difficult for the market to hold its position on these currencies.

The issue with wrapped coins is that these assets depend on third-party platforms and these platforms can have an indirect influence on these currencies. This would mark a devastating blow to the decentralized nature of these coins.

Future of Wrapped Coins:

Currently, wrapped coins are of immense importance. This is because this is the only way of communication between different forms of currency. Therefore, wrapped coins provide only communication between different blockchains.

However, the wrapped coins utilize third-party platforms for wrapping. This leaves them prone to centralization. Therefore, the developers are working on better ways to solve this problem.

Recently, a lot of effort has been put into transforming blockchains so that they can accept coins other than their network. This would solve the interchangeability problem.

However, this doesn’t mean that wrapped coins are going anywhere or their future is in jeopardy. These coins have been introduced as a way of communication among different blockchains and will remain there for a long time with a bright future.