• Dapps:16.23K
  • Blockchains:78
  • Active users:66.47M
  • 30d volume:$303.26B
  • 30d transactions:$879.24M
What are wrapped tokens?

What are wrapped tokens?

user avatar

by Alexandra Smirnova

a year ago


The cryptocurrency market is becoming more popular every day. Despite the growing popularity of Ethereum blockchain applications, most of them only work with ETH, the native asset of the blockchain. However, thanks to the "Wrapped Token" technology, tokens from other blockchain networks can be used in Ethereum-based applications. Let's take a look at what wrapped tokens are and how they work.

Contents:

Security of wrapped tokens

What is a wrapped token and how does it work

A wrapped token is a type of token used to store the value of an asset it represents on the Ethereum network. For example, Wrapped Bitcoin (WBTC) is a version of Bitcoin on the Ethereum network. Each WBTC is equivalent to one BTC and has the same value.

Wrapped tokens are created using a special type of smart contract called "token bridges".

These bridges transfer a token from one blockchain network to another. For example, to create WBTC, a user sends a certain amount of Bitcoin to the WBTC smart contract, which returns an equivalent amount of WBTC to them.

Application of this type of tokens

The main application of wrapped tokens is decentralized finance (DeFi) projects. Most DeFi applications are based on Ethereum and only accept Ether or erc-20 tokens. Wrapped tokens allow the use of Bitcoin or other tokens from different blockchains in Ethereum network applications.

Security of wrapped tokens

The security of a wrapped token depends on the reliability of the smart contract. However, not all wrapped tokens are the same, and their security depends on the organization that creates and manages the token.

Wrapped tokens serve as bridges between different blockchain networks, allowing users to use different cryptocurrencies in applications. This expands the use of cryptocurrencies and creates more opportunities in areas such as DeFi.

0

Share

Other articles

Exploring "The Kingdom": A New Era in Blockchain Gaming

Discover "The Kingdom," an innovative virtual tabletop RPG that seamlessly integrates deep lore, AI, and blockchain technology to offer a unique role-playing experience.

user avatarElena Ryabokon

7 hours ago

Sabong Saga: A Revolution in the World of Digital Fighting Cocks

​Sabong Saga is a Web3 game that takes fighting cocks into the digital age, allowing you to collect, breed and fight digital cocks while preserving the excitement of traditional fighting without cruelty.

user avatarMax Nevskyi

10 hours ago

Particle Network: Simplifying Blockchain Interaction through Smart Wallets and Advanced Solutions

Particle Network offers solutions to simplify working with blockchain networks, including smart wallets and integration of various cryptocurrencies, making interaction with Web3 more accessible and secure.

user avatarEve Adams

12 hours ago

TON Battleground: An innovative multiplayer game on the Telegram platform​

In recent years, games integrated into messengers have become increasingly popular. TON Battleground stands out among them, offering a unique royal battle directly on Telegram with interesting rewards.

user avatarMax Nevskyi

14 hours ago

Battle for Blockchain: Web3 Strategy Game with NFTs, Auto-Battles & DAO

Explore Battle for Blockchain — a fully on-chain Web3 strategy game with NFT units, token economy, auto-battler mechanics, and decentralized governance via DAO.

user avatarElena Ryabokon

16 hours ago

MoonPay: Simplifying Cryptocurrency Transactions and Innovations in Financial Technologies

MoonPay provides simple and secure solutions for buying, selling, and exchanging cryptocurrencies. The company is actively developing integration with various platforms and expanding its services in financial technologies.

user avatarEve Adams

17 hours ago

dapp expert logo
© 2020-2025. DappExpert. All rights reserved.
© 2020-2025. DappExpert. All rights reserved.

Important disclaimer: The information presented on the Dapp.Expert portal is intended solely for informational purposes and does not constitute an investment recommendation or a guide to action in the field of cryptocurrencies. The Dapp.Expert team is not responsible for any potential losses or missed profits associated with the use of materials published on the site. Before making investment decisions in cryptocurrencies, we recommend consulting a qualified financial advisor.