{"id":3403,"date":"2022-01-07T20:07:04","date_gmt":"2022-01-07T20:07:04","guid":{"rendered":"https:\/\/michaelleander.me\/?p=3403"},"modified":"2022-01-07T20:10:10","modified_gmt":"2022-01-07T20:10:10","slug":"wrapped-token","status":"publish","type":"post","link":"https:\/\/michaelleander.me\/wrapped-token\/","title":{"rendered":"What is a Wrapped Token? Finding Truth and Trading Potential"},"content":{"rendered":"\n

We have come across swappable tokens which can be easily swapped between two wallets and can be transacted more easily.<\/p>\n\n\n\n

But what if we tell you that some tokens and crypto-coins are not operable on their native network but instead are operated on different networks, so for making them transactable on their native blockchain, wrapped tokens were generated.<\/p>\n\n\n\n

As they enable the users to have a self-executable token in the form of wrapped tokens that can be used in their native blockchain and help them earn a fixed income. <\/p>\n\n\n\n

If you are interested in bitcoin trading visit  here to know benefits from using bitcoin<\/a>.<\/p>\n\n\n\n

What is a Wrapped Token?<\/strong><\/h2>\n\n\n\n

Wrapped means enveloping a thing, therefore the similar meaning of wrapped is applied in the case of cryptocurrencies, where an actual asset is wrapped under a digital vault called a wrapper which enables the cross transaction over another blockchain.<\/p>\n\n\n\n

By creating a wrapped version of that crypto asset, let\u2019s understand this with a simple story from our childhood, where once a jackal wears the dead skin of a sheep and disguises himself in the form of a sheep to join the flock of sheep.<\/p>\n\n\n\n

This is the exact situation in the case of different blockchains, which are not allowed to interact until and unless a communication or a digital interactive channel links them directly, therefore the use of these wrapped tokens helps to be easily used across different blockchains.<\/p>\n\n\n\n

How Does a Wrapped Token Work?<\/strong><\/h2>\n\n\n\n

It is transacted by the support of a decentralized autonomous organization (DAO), which acts as the wrapper and unwrapper of the wrapped token, assuming you tokenized bitcoin in the form of WBTC, a wrapped token for Bitcoin.<\/p>\n\n\n\n

You have to deposit the exact amount to DAO which equals the value of One WBTC, as it is based on the one-to-one pegged value of any native token, here it is Bitcoin.<\/p>\n\n\n\n

What Are the Features of a Wrapped Token?<\/strong><\/h2>\n\n\n\n

A wrapped token is very useful for bridging the communication and interaction issues between two different blockchains, therefore it holds plenty of features that make it compliant for any crypto trader:<\/p>\n\n\n\n

Here are the features of a wrapped token:<\/p>\n\n\n\n

  • Interoperability: <\/strong>Helps in the cross-transaction process between two different blockchains, and it also helps to exchange back the cryptocurrencies that were wrapped to get back into their original form.<\/li>
  • Lower gas cost: <\/strong>During wrapping a token, a gas cost is applied over the currencies, which directly means the computing energy consumed during the transaction process and at the time of validation, is charged from the users.<\/li>
  • Increases Liquidity: <\/strong>The conversion from one form to another form of a cryptocurrency can make it helpful to increase the rate of liquidity in the crypto market which directly impacts the selling price of various cryptocurrencies.<\/li><\/ul>\n\n\n\n

    What Are the Benefits of a Wrapped Token?<\/strong><\/h2>\n\n\n\n

    While using a wrapped token helps in many ways while trading in form of a tokenized version, its interoperability and swappable features enable the users to use the advantage of different blockchains at the same time which lacks on their native blockchain<\/p>\n\n\n\n

    Here are some benefits which are gained by using a wrapped token:<\/p>\n\n\n\n

    • Enables different tokens to be used in particular blockchain<\/strong><\/li>
    • Can easily wrap an idle token<\/strong><\/li>
    • Helps in creating more liquidity rate<\/strong><\/li>
    • Provides faster transaction period<\/strong><\/li>
    • Provides lower transaction fees<\/strong><\/li>
    • Able to use as Collateral for a DAO loan<\/strong><\/li><\/ul>\n\n\n\n

      Conclusion<\/strong><\/h3>\n\n\n\n

      The wrapped token has become an alternative way for creating liquidity in the crypto market and has also enabled an active cross-transaction over the different blockchains, which has resulted in a better investment flow.<\/p>\n","protected":false},"excerpt":{"rendered":"

      We have come across swappable tokens which can be easily swapped between two wallets and can be transacted more easily. But what if we tell you that some tokens and crypto-coins are not operable on their native network but instead are operated on different networks, so for making them transactable on their native blockchain, wrapped […]<\/p>\n","protected":false},"author":1,"featured_media":3404,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[853],"tags":[],"yst_prominent_words":[797,188],"_links":{"self":[{"href":"https:\/\/michaelleander.me\/wp-json\/wp\/v2\/posts\/3403"}],"collection":[{"href":"https:\/\/michaelleander.me\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/michaelleander.me\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/michaelleander.me\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/michaelleander.me\/wp-json\/wp\/v2\/comments?post=3403"}],"version-history":[{"count":0,"href":"https:\/\/michaelleander.me\/wp-json\/wp\/v2\/posts\/3403\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/michaelleander.me\/wp-json\/wp\/v2\/media\/3404"}],"wp:attachment":[{"href":"https:\/\/michaelleander.me\/wp-json\/wp\/v2\/media?parent=3403"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/michaelleander.me\/wp-json\/wp\/v2\/categories?post=3403"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/michaelleander.me\/wp-json\/wp\/v2\/tags?post=3403"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/michaelleander.me\/wp-json\/wp\/v2\/yst_prominent_words?post=3403"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}