Wrapped crypto tokens are

If you’re an avid trader, or trade on decentralised exchanges (DEXs) a lot, then you might have come across certain types of tokens or cryptocurrency that look familiar, and yet are very different from the crypto it appears to be named as.

For example, you might find tokens with the “w” prefix like wBTC or wETH and even wDOGE. These are simply the wrapped version of that familiar crypto. Hence, wBTC is in fact wrapped Bitcoin (BTC) and wDOGE is actually wrapped Dogecoin (DOGE).

You might also come across the term “bundled”, and sometimes, the prefix could even look different, but in general, many of these cryptocurrencies with these single lower case alphabet could actually be a form of wrapped tokens. In a latter section, we’ll take a look at some of these examples.

Wrapped tokens can be seen as a representation of the original token or digital asset. The original token is “wrapped” into a new token on a different network. Wrapped tokens bear the necessary traits and characteristics that allow them to communicate with the wrapping network.

This resulting wrapped token can then be freely transacted on the new network while leaving the original token untouched.

This means that for every amount of wrapped token that is created, an equal amount of the original token must be wrapped and locked to the new network. In this way, one must wrap 2 bitcoin to create 2 wrapped Bitcoin (2 BTC is needed to create 2 wBTC).