It’s no secret that the world of cryptocurrency is shrouded in mystery and complexities. For the uninitiated, the crypto world can be daunting and confusing. But don’t worry, we’re here to help.
In this blog post, Covemarkets will explore the differences between WETH Vs ETH.
What Is A ETH?
The native currency of the Ethereum blockchain is ether, also referred to as ETH. To reward miners, ETH is utilized for purposes like covering transaction costs on Ethereum.
What Is A WETH?
WETH meaning is wrapped Ether. WETH is an ETH variant that is ERC-20 compliant. The value of 1 ETH will always be equal to 1 WETH. ETH cannot be pre-approved (without approval) for item bidding. It needs to be wrapped because of this.
ETH can be utilized for sophisticated interactions on decentralized applications like LooksRare once it has been wrapped inside WETH.
The usage of WETH also enables standardizing the exchange codebase (for possible inclusion of new ERC-20 tokens) and aids in reducing risks like reentrancy (and another expensive fallback) that can happen with the transfer of ethers to unidentified parties (e.g., the ask side of the trade).
What Is the Difference Between ETH Vs WETH?
They are, indeed. ETH does not adhere to the ERC-20 standard. However, WETH does. Because ETH could not be used for many DeFi applications, WETH was developed. As a result, by encasing the ETH token in an ERC-20 compliant standard, a wide range of DApps could readily utilize it. This implies that users can design unique tokens for their unique DeFi apps.
Now it is equivalent to ETH in the case of WETH. This indicates that the cost of ETH and WETH are the same. As a result, you can easily convert your ETH to WETH on a dApp like 1inch and then continue using it if you want to utilize it to participate in a unique dApp.
A technological standard called ERC-20 is used to create tokens that can be issued on the Ethereum network. It just specifies the token’s characteristics. An ERC-20 token is fungible—one token can always be exchanged for another of equal value—is one of its most essential features.
But Why Can’t I Simply Use ETH for DApps on Ethereum?
The fact that ETH was introduced before token specifications were developed is the solution. This means it is not ERC-20 compatible, making frequent use considerably more difficult. As a result, you may just send your ETH to a smart contract and receive WETH in exchange, eliminating the need for a middleman.
Keep in mind that since ETH is a cryptocurrency, it is fungible.
Why Do We Need WETH?
Decentralized networks operate on complicated technology that necessitates ongoing upgrades to strengthen their blockchains, in contrast to centralized corporations that can simply offer smooth services, such as transferring assets from one bank to another.
WETH and other wrapped tokens are essential for smooth functioning across the rapidly growing decentralized space. They can be utilized for tasks like staking in decentralized applications.
Since every coin needs to be standardized for user access, intelligent contracts enable direct trades between users on Ethereum-based decentralized marketplaces. Tokens won’t be lost during conversion if this is done.
Advantages of Using WETH
Because WETH can only be created by a custodian (such as smart contracts) who ensures its value, it is more liquid than ETH.
Since its custodians frequently employ secure exchanges, WETH is more secure than ETH. As a result, you have more control over your tokens because the private keys are kept safe.
Its transaction fees are lower than those of ETH while still having a faster transaction speed.
WETH stakes are simple to place. This facilitates rapid access to the Ethereum network and staking incentives. You have two options for staking your tokens: smart contracts or WETH.
WETH is also compatible with other blockchains. There are ways to use wrapped ETH if you want to integrate the Ethereum ecosystem with another project.
What Is Wrapped Ether (WETH)?
On Ethereum, WETH is an ERC-20 token whose value is tied to the price of ether (ETH). WETH cannot be used to pay gas fees, but ETH, the native coin of Ethereum, can.
WETH, on the other hand, is particularly well-liked in the Decentralized Finance (DeFi) ecosystem and has a wider range of use cases than ETH. WETH is supported by MetaMask, TrustWallet, and all other Ethereum network wallets. Let’s look at some of its applications.
How Do Wrapped Tokens Work?
Let’s examine wrapped tokens now that we know the distinction between ETH and WETH. Sending the native asset to a centralized custodian is standard procedure when you wish to generate a wrapped version of any token (ideally a smart contract).
From a multi-sig wallet to a DAO or even a smart contract, this centralized organization can take many different forms (in the case of Ethereum). Here is the procedure in action.
- Assume for the moment that you require WETH for Ethereum. Then you merely link your wallet, which contains your ETH, to a decentralized exchange, such as 1inch.
- Once your wallet is connected, you must choose how much ETH you wish to convert into WETH before exchanging the tokens.
- As a result, you receive WETH in exchange for the ETH you sold. This applies to whatever decentralized applications you choose.
This would be straightforward for a centralized organization since they would burn a native asset after receiving it and mint its wrapped equivalent on a non-native blockchain. The user only needs to burn the wrapped asset and mint the native asset on the original network when they wish to convert the non-native asset back to their original one.
Wait, Are Wrapped Tokens Not Stablecoins?
Considering that the centralized entity is minting and burning native and non-native assets, the method is similar to how stablecoins would operate.
However, the issuer of stablecoins can readily have additional reserves of assets (other than physical money itself) to create stablecoins, which is an important distinction that must be made in this scenario.
However, with wrapped tokens, that is not feasible. However, because the concepts are so similar, it is very simple to become confused.
Do We Even Need Tokens in Wrappers?
That’s a resounding yes, of course. We need to use various products on various networks seamlessly to create the decentralized world that cryptocurrencies hope to create, just as it is possible to transfer money (potentially) from a domestic bank to an international bank if the two institutions are compatible with it.
While centralized companies are absolutely capable of achieving this interoperability, blockchain-based businesses find it impossible due to the much deeper network at play.
When users don’t want to sell their assets to buy new ones, the ability to move over native assets from one network to the other is unquestionably beneficial.
Just picture a person with substantial Bitcoin holdings. They first need to exchange their BTC for USDT to spend on Ethereum. They can easily engage in any dApp once they have USDT.
Because they follow the underlying asset’s price, wrapped tokens can be seen as derivatives in traditional finance. They are therefore matched precisely to the asset. They don’t resemble traditional derivatives in every way, but they provide consumers with an additional level of ecosystem interoperability.
Not just the Ethereum network allows for the production and use of wrapped tokens. On Binance Smart Chain (BSC), wrapped tokens of non-native assets can also be produced.
How Do I Transfer WETH to Coinbase or MetaMask?
WETH can be sent between separate wallets, just like any other cryptocurrency. Let’s examine your options for doing this.
Gather WETH at 1inch: Go to 1inch and exchange your ETH for the necessary amount of WETH. You can click on this link to view it.
You can move WETH to another wallet, such as Coinbase, once you see them in your wallet (like Metamask). Choosing “Import Tokens” will prompt you to confirm the addition of WETH as an asset if you can’t see the tokens.
Once you’ve finished, all you need to do to start the transfer is copy your Coinbase wallet’s address and paste it into your Metamask wallet. Again, you only need to add information about the token to your wallet if it does not already recognize the asset.
You should be aware that the Coinbase wallet supports the Ethereum network and “all ERC-20” tokens, so you can easily add your WETH to the wallet.
How to Unwrap WETH
Let’s look at how to unwrap WETH now that we understand how to wrap ETH into WETH.
The wrapped token is burned to revert it to its original state during the unwrapping procedure. As a result, WETH is transformed into ETH and transferred into your wallet when you unwrap it.
Ether can be unwrapped in a variety of ways:
-
- Smart contract manual interaction
- Utilize Uniswap or Binance to convert ETH into WETH.
- On OpenSea, employ MetaMask.
- For unwrapping our ETH, we’ll go with option three. Here are some prerequisites to think about:
- A MetaMask account as well as an OpenSea account. On MetaMask and OpenSea, registering is free.
- Money in your MetaMask wallet is sufficient. Your credit or debit card can add money to your wallet.
- Connect your MetaMask and OpenSea accounts once your wallet has been funded. You must consent to the connection.
How to Unwrap WETH on OpenSea using MetaMask
Please adhere to the steps listed below to unwrap tokens that have been wrapped:
- Log into your account at OpenSea.
- In the upper-right corner of the screen, click the wallet icon.
- You’ll be required to use your wallet to log in. Select MetaMask and carry on.
- Use your password to log in.
- You can view the specifics of your funds after logging into your account. If you don’t have enough money, add WETH.
- Choose the three dots that are next to your WETH information.
- Pick the final alternative (Unwrap).
- You’ll get a fresh popup with transaction information on your screen. Check the WETH’s specifications before unwrapping it for ETH.
- Toggle to Unwrap.
- Click Confirm to send the original asset (ETH) into your wallet after you’ve processed your request.
Even though the wrapping and unwrapping procedures for MetaMask were covered above, you can utilize alternative wallets if it’s more convenient for you.
Video
FAQs
Is wrapped ETH identical to ETH itself?
A token linked to ether is called Wrapped Ether (WETH) (ETH). Many platforms and DApps that support ERC-20 tokens employ WETH. Although ETH is utilized to cover network transaction costs, it does not function similarly to ERC-20 tokens. Wrapping is a simple conversion method that turns ETH into WETH.
How is safe wrapped ETH?
A Bitcoin token that has been wrapped in security from a technological standpoint. The security of the associated network will be held until it is transformed into an ERC-20 or BEP-20 token, which will most likely be in custody on secure platforms like Ethereum or Binance Smart Chain.
What kind of network is WETH?
Wrapped Ethereum, also known as WETH, is the cryptocurrency used to symbolize ether, the first cryptocurrency created by the Ethereum Network. The Ether variant that complies with ERC-20 standards is WETH.
Conclusion
It seems that there is no clear winner in the WETH vs ETH debate. Both have pros and cons, depending on what you want in a cryptocurrency. If you are looking for a more stable investment, then eth might be the better choice. However, if you are looking for more potential upside, then weth could be the better pick. Ultimately, it is up to the individual to decide which one is right.
Covemarkets hopes you’ll enjoy reading, and please feel free to leave your own thoughts in the comments!
