In return, you’ll receive interest until you decide to remove your deposit. You can wrap your ETH manually by interacting with the WETH smart contract, which will store your ETH and give you back the exact same amount of WETH. Another way of thinking about WETH and ETH is that the former is a derivative of the latter, which allows users to carry out more functions within the cryptocurrency world.

• When using Uniswap, a user first has to connect their wallet and ensure the Ethereum network is selected.
• WETH is an implementation of a token that turns raw Ether into an ERC20 token, making an ERC20 compatible version of Ether.
• There’s nothing to pull the redemption price away from 1-to-1 since it’s predefined in the code that governs the smart contract.

However, if you had purchased ETH in 2017, your investment would still be at 482% of the value you purchased. Had you waited until 2018, you’d still yield a 91.66% return this year. The main limitation of wrapped Ethereum is centralization since the process of wrapping the Ethereum token involves using a single centralized application.

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That uniformity should extend to cryptocurrency exchanges, too, to make exchange between different assets possible. Issued wrapped tokens depend on the third-party platforms that issue them, inevitably subjecting decisions pertaining to wrapped assets to central entities. Buterin voiced his concerns about the possibility of such a mechanism undermining the core principles of decentralization and transparency that the blockchain industry stands for.

This includes everything from strong financials to a capable leadership team to a competitive advantage in the industry. Analysts at Crestmont Research studied the S&P 500’s historic 20-year total returns to determine how many of those periods ended in positive gains. They found that every single 20-year period resulted in positive total returns. This means that if you had invested in an S&P 500 tracking fund at any point in history and simply held it for 20 years, you’d have made money. To check WETH’s price live in the fiat currency of your choice, you can use Crypto.com’s converter feature in the top-right corner of this page. If you are new to crypto, use the Crypto.com University and our Help Center to learn how to start buying Bitcoin, Ethereum, and other cryptocurrencies.

More precisely, Ether is the virtual currency that runs on top of the Ethereum network, but people usually talk of Ethereum as both the network and the virtual currency. WETH is pegged to the price of ethereum on a one-to-one basis. It allows you to convert ETH into a currency you can use on decentralized exchanges and in smart contracts. To create WETH, you would send ETH coins to a smart contract on the Ethereum blockchain. After the ETH is deposited into the contract, it is converted into WETH. It is possible to create synthetic tokens that track the price action of stocks.

How Does WETH Work?

Let’s see how you can swap your ETH for WETH using the Uniswap DEX or directly through your Metamask wallet. Ether doesn’t follow the same rules as ERC-20 tokens, but there is a demand to use it in ERC-20 DApps too. Wrapped Ether is the solution to this problem, and you may have already come across it.

Why Should I Use Wrapped Ethereum?

Remember that ERC-20 is a technical standard for issuing tokens on the Ethereum blockchain. One of the most crucial aspects of an ERC-20 token is that it is fungible, which means that one token will always be exchangeable for another one of the same value. But why would we ever need a wrapped version https://cryptolisting.org/blog/return-on-whole-equity-or-shareholders-funding-ratio of Ethereum to use on Ethereum’s blockchain? In this article, we’ll explore what necessitated the creation of WETH. Fastly looks to be nearing recurring profitability, and Wall Street analysts have pegged the company for an annualized earnings growth rate of 30% over the next five years.

Should I Convert ETH to WETH?

This allows for a much more decentralized ecosystem, where tokens can be easily traded or exchanged between different platforms. Wrapped tokens solve interoperability issues that most blockchains have and allow for the easy exchange of one token for another. For example, users cannot normally utilize Ether on the Bitcoin blockchain or Avalanche on the Ethereum blockchain. Through wrapping, underlying coins are tokenized and wrapped with a certain blockchain’s token standards, thus allowing for their use on that network. At the same time, it is also possible to create synthetic tokens that track the price of a set of assets.

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Currently, many projects leverage the Ethereum blockchain and the ERC-20 standard to issue the necessary tokens to operate their platforms. Like Bitcoin and Ether, ERC20 tokens can be tracked on the blockchain, as Ethereum tokens are just a specific type of smart contract that “lives” on the Ethereum blockchain. As stated before, WETH allows interoperability with standardized tokens.

Can I Use WETH as ETH?

There are wrapped tokens on other blockchains, such as Wrapped Bitcoin (WBTC). And ETH can be wrapped for use on different blockchains beyond Ethereum, helping to increase liquidity, capital efficiency and interoperability. Since most blockchains are silos in themselves, they do not offer fluid interoperability or the ability to transfer native tokens from one blockchain to another.