- A WETH or «wrapped ETH», is the one that is used to trade with other cryptographic tokens that comply with the ERC-20 standard, thus avoiding the incompatibility generated by its appearance after that of ETH
- Smart contracts and custodians ensure that the ETH converted into WETH meets all the necessary requirements and is well protected, while its owner operates in the ERC-20 standard.
If you are one of the many who want to get the most out of your Ethereum cryptocurrency holdings, you better keep reading. Is that, if you discover how to make Wrap and Unwrap Ethereum (WETH), you will have in your hands a powerful tool to take your investments to the next level, and multiply your profits effortlessly ..
For those who do not know yet, the difference between ETH and WETH happens because the first of them is the native token of the Ethereum blockchain, the one used to pay transaction fees and perform various basic operations. The downside is that ETH was built before the ERC-20 standard and doesn't conform to it .
A WETH or "wrapped ETH" is the one used to trade directly with other cryptographic tokens that do comply with the ERC-20 standard , since they are interoperable and can be used in transactions in ERC-compatible blockchains. -20, thus offering a huge solution..
In other words, a WETH provides more utility to ETH holders without the ETH losing value , as it is "wrapped" in a smart contract and minted in that currency, which we will call "WETH" in the future.
And what are the advantages of WETH?
The benefits of working with WETH are numerous , although we are going to list some of the most important today:
- Interoperability with other ERC-20 crypto tokens
- Security by engaging only in trustworthy operations
- Faster transaction speeds and lower transaction fees relative to ETH
Are there any downsides?
On the other hand, there are investors who reject this solution for various reasons and reasons . For example:
- You have to pay for gas rates, which affects the price
- Great care is required when 'wrapping and unwrapping' ETH
- It depends on custodians to mint and burn the tokens, and that generates centralization
How does a wrapped Ethereum or WETH work?
Before knowing how to Wrap and Unwrap Ethereum, it is important to consider how this system works ..
As we said before, the ERC-20 standard for crypto tokens was created after the ETH token appeared for the Ethereum blockchain. Therefore, the Ethereum token does not meet ERC-20 standards.
The process of modifying ETH to be compliant with ERC-20 tokens would be too costly and detrimental to the Ethereum blockchain . This is how this output was born for decentralized applications or DApps, for smart contracts and block chains, as long as they are compatible with ERC-20.
By converting ETH to WETH, a smart contract mints a WETH token that is backed by the ETH token that is sent for the transaction . The custodian who mints the WETH keeps the private key for the ETH token secure and ensures that the WETH has the same value as its underlying ETH token. There is the core of the matter.
Likewise, that smart contract that structures the WETH works so that it complies with the ERC-20 standards and can be used with other programs and software compatible with ERC-20, and hence its relevance in the operation.
WETH can be used as a native token on any ERC-20 compliant blockchain and DApps .
How to Wrap and Unwrap Ethereum step by step?
If you have ETH, whenever you want you can wrap it up and get your WETH simply by making that exchange. Eventually, yes, you will require a specific wallet that allows it, such as MetaMask, which you must synchronize with a DEX integrated in Ethereum, for example Uniswap , in order to proceed.
Following those elements, we are going to see how is the procedure to obtain WETH from ETH.
- In Chrome, log in to the official MetaMask website and download its extension for this browser
- Go to https://app.uniswap.org/#/swap and connect your wallet by selecting, as assets, ETH and WETH
- Select the amount of ETH you want to wrap, and click Wrap to see a simulation of fees
- If you are satisfied, you just have to confirm the procedure, and wait for your WETH to be stored in the wallet
If you want to undo the procedure, you only have to invest the assets, and perform the reverse operation . Meanwhile, you can use your WETH to operate on the ERC-20 standard without any limits.