If you have ever explored the Decentralized Finance (DeFi) world, then there is a likelihood you’ve heard about Wrapped Ethereum (WETH), a crypto asset designed to facilitate smooth trading between ERC-20 tokens and Ethereum. This guide explains in detail the importance of WETH.
What’s Wrapped Ethereum
In simpler terms, a Wrapped Ethereum serves as a tokenized representation of ETH. WETH allows users to explore Ethereum-based decentralized applications and DeFi projects that are powered by ERC-20 tokens. Just so you know, there are other popular wrapped tokens in the crypto world, including Wrapped Litecoin, Wrapped Bitcoin Cash, Wrapped ZCash, and Wrapped Bitcoin.
Why is Wrapped Ethereum Important?
Smart contracts, the computer programs that automate various functions, power all DeFi protocols. Among the most used smart contract standard on the Ethereum blockchain is ERC-20. But what’s a smart contract standard? It’s a set of rules a particular token need to follow in order to be compatible with various platforms built on Ethereum.
ERC-20 streamlines the creation of smart contracts and decentralized applications by getting rid of the need to write custom codes for every new crypto asset. However, the problem is that ETH was created years before this smart contract standard was introduced. This means Ethereum and ERC-20 tokens are incompatible; therefore, you cannot trade any ERC-20 token for Ethereum or vice versa.
And that’s where wrapped Ethereum comes in. WETH enables DeFi users to exchange ERC-20 tokens for Ethereum easily. In other words, we can say WETH is ETH’s ERC-20 version that’s compatible with Ethereum-based DeFi platforms.
Where to Get WETH
As we have said, Wrapped Ethereum is used in the DeFi space. Therefore, you need a decentralized crypto wallet with some ETH to get WETH. Here is how you can obtain the token:
From UniSwap
First, connect your crypto wallet with ETH to UniSwap decentralized exchange. Now follow the steps below to exchange your ETH for WETH:
- On the UniSwap platform, select ETH as the token to be exchanged and Wrapped Ethereum as the token to be received.
- Enter the amount of ETH you want to Wrap and click “Wrap.”
- After doing so, your crypto wallet will display details of the transaction, including the gas fees to be incurred and the amount of WETH you will receive. If you are satisfied, hit “Confirm” to approve the transaction, and within a few minutes, your WETH will reflect in your wallet.
From OpenSea
To obtain WETH from OpenSea, follow these steps:
- Go to the OpenSea website (opensea.io) and click “Wallet” on the homepage.
- Now click the three-dot menu near Ethereum and select “Wrap,” then enter the ETH amount to be converted to WETH.
- Once done, hit “Wrap ETH.” Approve the transaction after your crypto wallet’s pop-up window appears.
- After your ETH gets wrapped, the WETH will reflect on your OpenSea account with a pink ETH logo.
On MetaMask
Here is how to get WETH on MetaMask:
- Open your MetaMask wallet and switch the network to Ethereum Mainnet.
- Click “Swap,” and on the “Swap to” box, select WETH.
- Now enter the ETH amount to be wrapped and hit “Review Swap.” Expect a window to appear showing the amount of WETH to be received. If you wish to continue, click “Swap.”
Advantages and Disadvantages of Wrapped Ethereum
Advantages
DeFi compatibility: Since WETH is considered an ERC-20 token, it becomes compatible with the many DeFi protocols on Ethereum, allowing holders to explore the decentralized finance world seamlessly.
Improved Liquidity: When you wrap your ETH, it is deposited to a particular liquidity pool, thus providing liquidity to the decentralized exchange. This makes it easy for traders wishing to swap tokens.
Disadvantages
Extra Step: Wrapping ETH is an extra step in trading which some traders may find inconvenient.
Gas Fees: There are network fees incurred when wrapping Ethereum, which may be considerably high during network congestion.
Conclusion
With several investment opportunities available in the DeFi world, it is evident that obtaining some WETH can prove to be beneficial. As a WETH holder, you can provide liquidity to earn LP rewards or even lend to earn loan interest.
SureTradeGroup.com is not responsible for the content, accuracy, quality, advertising, products or any other content posted on the site. Some of the content on this site is paid content that is not written or posted by our writers or editors and the opinions expressed do not reflect the opinions of this website. Any disagreement you may have with brands or companies mentioned in articles will need to be taken care of directly with those specific brands and companies. The responsibility of anyone who may click links in our articles and ultimately sign up for that product or service is their own. Forex, Stocks, Cryptocurrencies, NFTs and Dogital Tokens are all a high-risk asset, investing in them can lead to losses. Readers should do their own research before taking any action.