Internet
wrapped token
What does wrapped token mean?
A token pegged 1:1 to an underlying asset so it can be used on a chain or protocol where the original can't, such as Wrapped Bitcoin (WBTC) on Ethereum.
"I wrapped my BTC into WBTC to use it in Ethereum DeFi."
Origin
DeFi mechanism enabling cross-chain and cross-protocol asset use.
Frequently asked questions
What is a wrapped token?
It is a token pegged 1:1 to an underlying asset so the asset can be used on a chain or protocol where the original cannot, such as WBTC on Ethereum.
Why wrap a token?
Wrapping lets an asset like Bitcoin participate in another ecosystem's DeFi, since the native coin isn't directly compatible with that chain.
Is a wrapped token the same value as the original?
It is designed to be, since each wrapped token is backed 1:1 by the underlying asset held in reserve or custody.
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