What is a Wrapped Crypto?

A wrapped crypto is a token that represents another cryptocurrency on a different blockchain. It is a way to enable cross-chain compatibility and interoperability between different blockchain networks.

Benefits of wrapped cryptos

1. Cross-chain compatibility: Wrapped cryptos allow users to access and utilize assets from different blockchains without having to switch between networks.

Example of a wrapped crypto: Wrapped Bitcoin (WBTC)

Wrapped Bitcoin (WBTC) is an example of a wrapped crypto. It represents Bitcoin (BTC) on the Ethereum blockchain, allowing users to access BTC's value and liquidity in the Ethereum ecosystem.

Conclusion

Wrapped cryptos play a crucial role in bridging different blockchain networks and expanding the functionalities of cryptocurrencies. They provide a means for users to access assets from other blockchains, increasing liquidity and fostering interoperability.

Wrapping process

1. User locks their BTC in a custodial wallet.

How does it work?

When a crypto asset is wrapped, it is locked on its native blockchain and an equivalent amount of tokens is issued on the destination blockchain. These wrapped tokens can then be traded, transferred, or used in decentralized applications (DApps) on the new blockchain.