Wrapped Ether (WETH) is a coin that is linked to Ether (ETH). WETH is utilized in a number of sites and dApps that use ERC-20 tokens. While ETH is used to pay network transaction fees, it lacks the functionality of ERC-20 tokens.
Wrapping is a simple technique that allows you to convert ETH to WETH. You may also exchange WETH for ETH at any moment. Wrapping and unwrapping have a 1:1 ratio, which means there are no additional expenditures aside from transaction fees.
What Is Wrapped Ether (WETH)
Wrapped Ether, often known as WETH, is the ERC-20 form of Ether. This wrapped currency improves Ether’s interoperability by allowing it to be used on ERC-20-compliant blockchains.
WETH’s value functions on a 1:1 basis with stablecoins. 1 WETH is equivalent to 1 Ether. You may also obtain the same amount of Ether back by trading it for WETH.
How Does Wrapped Ether Work?
In the crypto-verse, Ether is one of the most well-known cryptocurrencies. It is difficult to discuss top cryptocurrencies without including Ether. It is the native currency of Ethereum, the world’s second-biggest blockchain network.
Wrapped Ether, often known as WETH, is an ERC-20-compliant form of Ether. The phrase WETH has gained popularity over time, and you’ve probably heard it before when reading about or discussing Ethereum.
Ether was established prior to the ERC20 standard as a native currency on the Ethereum network. As a result, it is not ERC20 compliant and cannot be traded for other ERC20 tokens directly.
Ether must be wrapped in WETH before it can be traded with other Ethereum-based tokens that follow the ERC20 standard. Wrapping ETH does not affect its value as the ratio remains 1:1.
Wrapped Ether is formed by passing Ether to a smart contract, which holds the Ether and returns WETH ERC20 tokens. Wrapped Ether can also be returned to the same smart contract and “unwrapped,” revealing the original Ether.
Using a single smart contract to wrap and unwrap ether removed the need to design two interfaces (one for Ether and one for ERC20 tokens) within the same smart contract.
Wrapping them increases their usefulness. The tokens can be traded for other ERC20 tokens without the need for middlemen.
How to Wrap WETH?
You will need an Ethereum-compatible crypto wallet to wrap Ether. There are a plethora of them on the market. Some reputable examples are – MetaMask, Ledger Nano X, Trezor, Rainbow Wallet, Guarda, Argent, and Exodus.
To convert your ETH to WETH, go to an Ethereum-based decentralized trading site. Let’s use Uniswap as an example for your convenience. Follow the steps below:
- Visit https://app.uniswap.org/#/swap?chain=mainnet
- Connect your crypto wallet
- In the Swap option, choose ETH on the top and WETH at the bottom
- Set the amount
- Click on ‘Swap’
Your wallet will receive a pop-up notification showing the total transaction amount and estimated gas fees. Press ‘Confirm’ and your swap will be completed. You can also swap ETH for WETH using OpenSea.
How to Unwrap WETH?
To make you understand better how to unwrap WETH, we will be using OpenSea to unwrap WETH in a few steps. The steps are as follows:
- Visit https://opensea.io/
- Log in to your OpenSea account
- On the top-right corner of the screen, click on the wallet icon
- Click on the three dots next to WETH
- Press the ‘Unwrap’ option
- Click on ‘Confirm’ after the server processes your request
The unwrapped Ether tokens will be credited to your wallet instantly.
ERC20 Token Standard
The ERC20 token standard specifies the rules and specifications for issuing tokens on the Ethereum network. Some of the regulations governing how tokens may be moved, how transactions are approved, and how users can access token data.
ERC20 tokens are analogous to cryptocurrencies such as Bitcoin and Litecoin. The main distinction is that the tokens are issued on the Ethereum network rather than their own blockchain.
On the Ethereum network in 2019, there are over 200,000 ERC20 tokens. Maker (MKR), OmiseGo (OMG), and Augur are some of the biggest digital currencies that use the ERC20 standard (REP).
Prior to the introduction of ERC20 tokens, crypto exchanges had to build unique bridges across platforms in order to facilitate the trading of any token.
Wrapped Ether arose as a result of the popularity of ERC20 Tokens. Wrapping Ether is required to reap the benefits and extensive functionality of ERC20 tokens.
Despite some ongoing debate about other token interfaces such as ERC223, ERC20 is usually regarded as the de facto standard on the Ethereum network. For direct and decentralized peer-to-peer trade, many Ethereum-based decentralized apps (DApps) employ WETH rather than Ether.
Experts are now working on developing a canonical WETH standard that can service all Ethereum-based dApps.
Stefan George’s EtherToken.sol contract serves as the foundation for the proposed canonical WETH contract. The source code for the proposed WETH contract has been thoroughly vetted, and the idea has so far received a positive reaction from the community.
Conclusion
Ethereum has one of the oldest and most developed DApp ecosystems out there. This makes WETH a necessity, as many ETH holders want to use their ETH in DeFi projects. If you decide to start experimenting with WETH, we recommend buying it with ETH or other tokens, as it’s simpler and more convenient than interacting with the wrapping smart contracts.
