Frequently Asked Questions
A wrapped token is a cryptocurrency token pegged to the value of another asset, typically one from a different blockchain. For example, Wrapped Bitcoin (WBTC) is an ERC-20 token backed 1:1 by Bitcoin, enabling BTC holders to use their assets on the Ethereum network.
Wrapped tokens increase interoperability between different blockchain networks, allowing users to leverage non-native assets in DeFi applications, lending protocols, yield farming, and DEX trading.
Wrapped token development involves creating a smart contract (often ERC-20 or BEP-20) that manages the minting and burning of tokens. A custodian locks the original asset and issues an equivalent wrapped version on another blockchain.
Wrapped tokens offer improved liquidity, cross-chain asset usage, faster transaction speeds (on networks like Ethereum), and expanded use cases for traditionally non-DeFi assets like Bitcoin or fiat-backed tokens.
Popular blockchains for wrapped token development include Ethereum, Binance Smart Chain (BSC), Polygon, Solana, and Avalanche. Developers often choose platforms based on liquidity, smart contract support, and network fees.
