Wrapped Tokens - Crypto Academy / S4W6 - Homework post for pelon53.
QUESTION 1
Name at least two blockchains that uses wrapped btc, excluding etheruem and also show screenshots.
Blockchains that uses the wrapped btc
The Tron Blockchain
I will begin with the Tron Blockchain, the tron Blockchain uses the TRC20 network for its token and is also similar to the ERC20 network standard. The tron Blockchain is also known for its very cheap transaction fee. It is of no doubt that the tron network with its popularity uses the wrapped btc.
The wrapped bitcoin in the tron Blockchain has the value as its value is being pegged to the value of the main bitcoin cryptocurrency. The Dapps in the tron Blockchain accepts deposits of bitcoin using the wrapped bitcoin of the tron Blockchain being the WBTC. We can see that in the screenshot below.
The Solana Blockchain
The Solana Blockchain has been known as one of the leading blockchains. This is based to the fact that it is regarded as a third generation blockchian project. The main idea behind the Solana Blockchain is the increasing the speed and the scalability when compared to the other blockchains.
It is no doubt then the Solana Blockchain incorporated the wrapped token with bitcoin inclusive. The Solana Blockchain uses the wrapped bitcoin with the token symbol as the sollet. And the wrapped bitcoin has its price pegged the value of the bitcoin itself. We can see that in the screenshot below.
QUESTION 2
What is the difference between the WETH of the ethereum platform and the WETH of the tron platform
Difference between WETH of ethereum platform and of tron platform
I will begin with the weth of the ethereum platform. Normally, the ethereum is a Blockchain based cryptocurrency and the ERC20 token were created as a standard for the Dapps on the Ethereum Blockchain.
Since we have the incompatibility of the ERC20 and ETH on the Ethereum Blockchain, there we have the coming in of the wrapped ethereum. The wrapped therefore enables transactions between the ethereum cryptocurrency and the ERC20 tokens. Normally the value of the wrapped ethereum is not any different from the value of the real ethereum because the value of the wrapped ethereum is pegged to the real price of the ethereum.
Going now to the WETH on the Tron Blockchain, we see that the tron Blockchain has its standard network as the TRC20 network. Now the wrapped ethereum in the tron Blockchain operates on theDapps which are built on the tron Blockchain. The value just as in the case above is also the same and is pegged to the real value of the ethereum.
QUESTION 3
Make an investment of at least $5 of a wrapped token of the tron Blockchain and show screenshots
Investment on the Tron Blockchain
Step 1
I will be using the justswap decentralized exchange to purchase the wrapped bitcoin. I will be accessing the justswp using the tronlink wallet. I begin by logging into the tronlink app and clicking on discover. I then search the justswap on the search panel as we can see in the screenshots below.
Step 2
On the justswap, my wallet is already connected, so I will be purchasing the WBTC using the trx cryptocurrency. On the swap section I input the amount of trx I wish to swap which I will be putting 60trx and I select the WBTC which will be worth 0.0001 as show in the screenshot below, which I then confirm and sign with my password.
QUESTION 4
Explain in detail the wrapped token of the tron Blockchain and show screenshots.
Wrapped Tokens of the Tron Blockchain
The tron Blockchain host a number of wrapped tokens. Beginning with an explanation of the tron Blockchain itself, the tron Blockchain is known to be one the cheapest blockchains with a very low transaction fee. The tron Blockchain host trc20 token as their main tokens meanwhile we have other wrapped tokens added to the tron Blockchain with their prices being pegged to real values of the original tokens.
Some of these wrapped tokens in the tron Blockchain include;
- The wrapped bitcoin (WBTC)
- The wrapped ethereum (WETH)
- The wrapped just (WJST)
- The wrapped dot (WDOT)
etc
The wrapped tokens in the tron Blockchain was brought about by the main company in charge of minting wrapped ERC20 tokens which is the Bitgo Company.
The main function of the Bitgo Company is making sure that the prices of the wrapped tokens are pegged to the same value of the main token which is also minted and managed by the central organization ensuring the authenticity and the safety of the wrapped token.
QUESTION 5
What is to mint a wrapped token? What is burning a wrapped token? What is their function? Create an example and explain the process.
Minting a wrapped token
The process of holding the custodian original token and wraps is giving the name minting. The minting process is quite necessary because after the minting process the token is sent to the Blockchain which it operates on.
So in general the process of converting a token to the wrapped token is known as minting.
Burning a wrappd token
The process of exchanging a wrapped to the main token is given the name burning a wrapped token.
Meaning here that an exchange request is placed by depositing and requesting the exchanging of the wrapped token to the initial token. It normally explained that when a wrapped token is created, there is the deposit of an equal amount deposited to the said Bitgo which allows traders to mint the equivalent main token as wrapped token.
Functions of wrapped tokens
The wrapped token has numerous functions which include, reduced processing time. The wrapped token is being seen to have lesser waiting time in its transactions.
Also the wrapped token is noted to generate more liquidity in the centralized as well as the decentralized exchanges when tokens are being moved from one Blockchain to another.
Example Process
The process is quite simple and straight forward. Let’s assume I have $100 worth of bitcoins and I wish to do an investment on the tron Blockchain. What I will need to do is I will send the $100 worth of bitcoins to the Bitgo which is a custodian and they will mint the $100 worth of bitcoin to wrapped btc which I can receive now invest in the tron Blockchain.
But before receiving the wrapped btc, I will need to sign the smart contract before receiving and it will have the same value as that of the original btc. All of the process is known as minting.
Now moving to the second process, lets say I wish now to convert back my $100 worth of wrapped bitcoin back to the original bitcoin, I will then do the reverse by sending the wrapped btc to the custodian and signing the smart contract which will undergo the process of burning to convert to the original btc of the same value.
conclusion
We have seen the wrapped token in the tron and the Solana Blockchain with their various showcase of the bitcoin wrapped token in the two blockchains.
I have also demonstrated the difference of the wrapped ethereum on the ethereum platform as well as on the tron platform.
We have also seen the process of minting which is converting a token to a wrapped token and the process of burning which is converting a wrapped token back to original token.