Today we have many blockchain networks and interoperability between these blockchains is an issue. Wrapped crypto coins are a solution to bridging the gap between two coins or protocols.
In this article, you will read about wrapped crypto coins and their functions.
What are Wrapped Coins in Crypto?
Wrapped crypto coins reflect the characteristics of two crypto coins based on different blockchain protocols. They are created by locking the original digital asset in a digital vault and minting the wrapped coin on a different blockchain. Let us understand this by taking Wrapped Bitcoin (WBTC) as an example.
Wrapped Bitcoin is built on the Ethereum network. The value of one WBTC is pegged to the value of one BTC in a 1:1 ratio. This ensures that the wrapped coin remains stable.
The original BTC coins were not compatible with the Ethereum protocol, but WBTC coins are compatible with the Ethereum ecosystem, wallets, Decentralised apps (DApps), and smart contracts.
Role of Wrapped Crypto Coins
Wrapped crypto coins play a crucial role in the seamless transfer of digital funds across protocols. They facilitate the interaction between different protocols, which was impossible earlier.
If you are a BTC holder and want to stake it in the Ethereum protocol, you can lock your BTC coins in a secure digital vault and mint WBTC coins. The WBTC coins thus minted have a fixed value as the original BTC coins are locked up and will not be affected by market fluctuations.
Wrapped crypto coins serve the following purposes.
Liquidity
The main purpose of Wrapped crypto coins is to provide liquidity for particular coins on another blockchain. For example, WBTC provides liquidity for Bitcoins on the Ethereum platform.
Use of Smart contracts
With wrapped crypto coins, you can use the smart contracts of one coin on another platform. In the case of WBTC, you can use the smart contracts of Bitcoin on the Ethereum platform too.
Borrowing on DeFi Platforms
Wrapped crypto coins can be used for borrowing between different DeFi platforms. In our example, a Bitcoin holder can now get loans from the Ethereum platform by keeping WBTC as collateral. Such inter-platform borrowings were previously impossible.
Staking
Another use case of wrapped crypto tokens is staking. Now staking can be done across platforms. Even if you are just a holder of Bitcoin, with wrapped BTC you can stake your token holdings on the Ethereum platform and earn huge rewards.
Yield Farming
Yield farming is similar to staking but it has a shorter lockup period. With wrapped tokens, you can use your digital assets for yield farming on various platforms. It is a sought-after method to earn passive income from your digital assets.
Top 10 Wrapped Crypto Tokens by Market Capitalization
Wrapped crypto tokens have become the trend due to the interoperability they facilitate across various platforms. There are many wrapped crypto tokens in the market.
We have listed the top 10 wrapped crypto tokens according to increasing market capitalization. Check the table below to gain an insight into their current market price, 24-hour trading volume, and circulating supply.
| Sl.No: | Name of the Token | Current Price | Market Capitalization | 24-Hour Trading Volume | Circulating Supply |
| 1. | Wrapped Bitcoin (WBTC) | $59,326.11 | $9,114,556,628 | $9,114,556,628 | 153,634 WBTC |
| 2. | WETH (WETH) | $2,476.13 | $8,357,732,950 | $898,878,176 | 3,375,318 WETH |
| 3. | Wrapped eETH (WeETH) | $2,592.11 | $4,045,727,802 | $14,434,884 | 1,560,785 weETH |
| 4. | Wrapped BNB (WBNB) | $540.01 | $854,770,013 | $239,811,302 | 1,582,885 WBNB |
| 5. | Wrapped MATIC (WMATIC) | $0.4617 | $69,212,235 | $25,597,907 | 149,938,332 WMATIC |
| 6. | Wrapped NXM (WNXM) | $54.14 | $43,784,985 | $1,243,662 | 808,662 WNXM |
| 7. | Wrapped Sei (WSEI) | $0.3122 | $25,896,127 | $1,339,864 | 82,947,452 WSEI |
| 8. | renBTC (RENBTC) | $58,894.56 | $19,431,079 | $216 | 330 RENBTC |
| 9. | Wrapped Rootstock Smart Bitcoin (WRBTC) | $59,386.14 | $18,480,487 | $244,592 | 311 WRBTC |
| 10. | Wrapped Huobi Token (WHT) | $2.89 | $2,938,313 | $3,274 | 1,015,994 WHT |
The Bottom Line: What is the Future of Wrapped Crypto Tokens?
Wrapped crypto tokens were a revolutionary invention in the DeFi space. They have many other potential use cases which will hopefully be explored in the future.
In this age of transition from Web 2 to Web 3, the interactivity provided by wrapped crypto tokens should be leveraged to its full potential. Wrapped crypto tokens are a fast-developing area, and the future is bright with many new developments in the field.
