WETH

WETH (Wrapped ETH)

WETH, or Wrapped ETH, is a tokenized version of Ethereum's native cryptocurrency, ETH. It allows users to interact seamlessly with decentralized applications (dApps) on the Ethereum blockchain and other compatible networks. By adhering to ERC-20 token standards, WETH enhances interoperability, enabling it to function effectively alongside a wide variety of other ERC-20 tokens.

Utility and Functionality

WETH empowers holders with a multitude of options, including staking, yield farming, lending, and providing liquidity to various liquidity pools. Unlike ETH, which is limited to the Ethereum network due to its non-ERC-20 compliance, WETH can be utilized across various ecosystems such as Binance Smart Chain, Polygon, Solana, and Cardano. This versatility opens up new avenues for users to maximize their assets in a cost-effective manner.

Price Stability

The price of WETH is intrinsically linked to that of ETH, maintaining a consistent 1:1 wrapping ratio. This ensures that the value of WETH mirrors that of ETH at all times, providing stability and confidence for users who choose to wrap their assets.

How to Wrap ETH

Wrapping ETH involves sending ETH to a custodian, which can be a multi-signature wallet, a Decentralized Autonomous Organization (DAO), or a smart contract. After connecting a web3 wallet to a decentralized finance (DeFi) exchange, users can specify the amount of ETH they wish to wrap and initiate the swap function. Upon transaction confirmation, WETH tokens equivalent to the ETH deposited are received.

On centralized exchanges, the process involves burning the deposited ETH and minting the corresponding amount of WETH. Conversely, unwrapping WETH back to ETH entails burning the wrapped tokens and minting ETH for the user.

Future of WETH

Interestingly, the development team has indicated that the long-term goal is to eliminate the need for WETH altogether. Plans are underway to upgrade ETH to comply with its own ERC-20 standards, potentially rendering wrapping unnecessary in the future.