Most of us are familiar with what Ethereum/Ether/ETH is. Here is a little recap just in case;
Ethereum is a blockchain-based software platform that runs a digital currency called an Ether initialized as ETH. Ether is a native token on the Ethereum network, but the blockchain has other tokens running on the same technology.
Here now comes the need for wrapped Ethereum.
Ether tokens cannot be exchanged with other Ethereum based tokens unless they are wrapped into WETH.
Therefore, a wrapped Ethereum is an ERC-20 compatible version of Ether created to allow interaction with other tokens on the network. It is important to note that wrapping ETH to WETH does not affect its value (1ETH=1WETH)
ERC-20 Background
The Ethereum network has been steadily growing and is now easily attracting players in digital assets from other blockchain protocols. This development has necessitated a means by which assets like Bitcoin can be put on the Ethereum network and be able to interact. Unfortunately, the native token on the Ethereum network, Ether, cannot directly interact with other tokens on its network.
The ERC-20 is a technical standard built for Ethereum tokens that makes it possible for developers to create decentralized applications that can interact provided they conform to the standard. The ERC-20 remains the most used standard for token design to ensure that smart contracts remain compatible with decentralized exchanges and lending protocols.
How to Buy WETH
Buying WETH is not a complicated endeavor. You could use cash, credit cards, or even online payment systems like PayPal.
Below are the series of steps you should follow to own WETH assets.
- Buy Crypt assets (Bitcoin, Ether, etc.) on your preferred exchange
- Transfer your bought assets to a platform that supports WETH currency, e.g., Radar Relay, 1inch, Uniswap
- Finally, exchange your assets to their WETH equivalent.
- Secure your WETH by putting it in a secure wallet
Advantages of WETH Tokens
Primarily, as discussed earlier, the major reason why wrapping Ether became necessary was so that ETH could be traded directly with other ERC-20 tokens. However, this is not the only reason WETH is popular.
Below are some examples of advantages and other functionalities associated with WETH tokens.
Imagine you own a lot of money and decide to go to an amusement park where everything is paid in a different currency. Therefore, it would mean that for every activity you choose to participate in, you will be required to change your money for the vendor’s significance and repeat this process for every other vendor.
Tiresome, Right?
Unfortunately, this was the situation on the Ethereum Network. Whenever a user wished to interact with other DeFi apps, he/she would have to change their Ether balance into the token they need before accessing that service.
Now imagine there are thousands of tokens tradeable; it would be hectic.
Although it seems unlikely that Ethereum’s key token is incompatible with its own ecosystem, this was purposely intended in the design. The developers wanted to keep the roots of the Ethereum blockchain as least altered as could possible.
The profound solution of WETH tokens allows you to
Trade more easily and safely. When you transform your Ether assets to WETH, you now readily have funds in a token you can quickly exchange over decentralized exchanges. WETH is an ERC-20 conforming token and can be exchanged directly for other ERC-20 tokens easily.
Reduces the cost of Gas Within the Blockchain. As opposed to converting and re-converting ETH tokens to and fro as per the desired token, WETH saves on the frequency of conversions by providing readily convertible tokens. This reduces operations within the Ethereum blockchain and correlatively lowers the cost of gas on the network.
Facilitates interoperability. Since ERC-20 is a token standard based on smart contracts, it allows for the integration of decentralized applications and decentralized exchanges on the Ethereum network. Traditionally, a third party would have been necessary, but now real-time operations are possible, retaining all power in the hands of the users.
Can WETH be Unwrapped?
Yes, It is possible to unwrap WETH back to Ether once you are done with the tokens. All you have to do is use a decentralized exchange that supports unwrapping WETH tokens and get your WETH balance back in ETH. A decentralized exchange (DEX) is a platform that allows you to hold any of your cryptocurrency assets while still availing them for trade.
As of today, the WETH price is $3,219.51, a 5.69% rise within the last 24 hours and with a 24-hour trading volume of $1,830,596,946. As numbers don’t lie, WETH has fairly established a user base, and you should not shy off from experiencing this new possibility.
At mycryptoparadise.com, we thrive and pride ourselves in giving the best crypto trading signals and expert advice via our telegram channel throughout your journey of learning about and trading cryptocurrencies. Wrapped ETH permits to action plenty of previous roadblocks- get in touch to find out how.
