Wrapped Tokens - Crypto Academy / S4W6 - Homework post for pelon53

First of all let's discuss some facts about Wrapped Tokens

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The wrapped tokens are made for the purpose to use tokens outside of their blockchain, the tokens that are build for their own blockchain can be used exterior to their own blockchain, These wrapped tokens are specially made to use them outside their own network.

The tokens are made specifically for use in their own blockchain and cannot be used on another blockchain network, wrapped tokens works as an intermediate and their value is also almost equal to their original token.

This is called the tokenization of native cryptocurrency into another cryptocurrency so that it can be used into another blockchain, is is called tokenized coins or even called as wrapped tokens.

QUESTION 1:

ANSWER 1:

Let's Mention some of the blockchain that use the wrapped BTC, excluding Ethereum, there are not many of these but some off them are listed below:

• Bitcoin BEP2 on Binance smart chain.

Bitcoin BEP2 is the wrapped token or we can say tokenized coin for bitcoin to be use over the Binance smart chain blockchain. They often call it as pegged coin.

^Source

• Bitcoin BEP2 Price (BTCB): $54,750.35.
• Market Cap: $5,782,674,616.
• Volume 24h: $88,848,294.
• Circulating Supply: 105,094.64 BTCB.
• Contract: 0x7130d2a12b9bcbfae4f2634d864a1ee1ce3ead9c.

Use of Bitcoin BEP2 token.

On pancake swap we can exchange BTCB over the pancakeswap exchange.

^Pancakeswap

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• Bitcoin TRC20 on TRON Blockchain

Bitcoin TRC20 is the wrapped token for the bitcoin that can be used over the tron blockchain.

^Source

• Bitcoin TRC20 Price (BTCT): $55,033.22.
• Market Cap: $1,424,590,820.
• Volume 24h: $6,330,560.
• Circulating Supply: 25,000.00 BTCT.
• Contract: TN3W4H6rK2ce4vX9YnFQHwKENnHjoxb3m9.

Use of Bitcoin BTCT token.

On pancake swap we can exchange BTCB over the Justswap exchange.

^Justswap

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There are many different more tokens that are wrapped bitcoin token from the Ethereum blockchain:

• Wrapped BTC(WBTC).
• renBTC(RENBTC).
• Huobi BTC (HBTC).

QUESTION 2:

ANSWER 2:

• WETH on Etherium platform.

As we know the Etherium is a blockchain and its native token is also called as etherium (ETH), but there's still wrapped etherium token, this is because the ETH token is different from the ERC20 token, so because of this dapps who support ERC20 tokens cannot carry out transaction of ETH, so to carry out transaction we need a ERC20 token in form of etherium, that's why wrapped etherium token is created for the Etherium block chain itself.

^{WETH on CoinmarketCap}

This ERC20 token is tokenized hence it has almost the same price as etherium (ETH), so to maintain it's price we doesn't require to maintain it's price separately, it's price is influenced by the original ETH token.

• WETH on Tron platform.

As we know the Etherium is a token specially created for the Etherium blockchain, so to use ETH over the tron chain, the wrapped etherium token is created for the tron blockchain itself, It doesn't belong to the Etherium blockchain because it is created by a company which is called BitGo and the same company integrated BTC to the tron blockchain in form of wrapped bitcoin, The wrapped token over etherium platform is ERC20 where as wrapped token over tron platform is TRC20,

The tron WETH, is not influenced by the price of original Etherium token, tokens are needed to be burned in order to maintain the price of WETH over the tron platform, The transaction carried between ETH and WETH(TRC20) are governed by the BitGo.

^{BitGo and Tron tweet by justin sun}

QUESTION 3:

ANSWER 3:

For this purpose I choose the Binance exchange and converted the BTC token into WBTC, As we know WBTC is a wrapped Bitcoin token.

• Step 1: Go to the fiat and spot wallet and check the asset balance.

• Step 2: Click the trade button and find the pair WBTC/BTC.
• Step 3: Now click select the amount and order type and click buy.

• Step 4: Now we can see our asset balance and out BTC get converted into WBTC.

QUESTION 4:

ANSWER 4:

There are currently many wrapped tokens over the TRON SCAN, which is a tron blockchain explorer, but only the details of 4 tokens are mentioned over their and the main wrapped tokens over tron blockchain are as follows:

Over 50 wrapped tokens over tronscan:

These are the main tokens:

• Wrapped BTC (WBTC).
• Wrapped ETH (WETH).
• Wrapped BTT (WBTT).
• Wrapped TRX (WTRX).

Let's discuss about them one by one:

• Wrapped BTC(WBTC)

As we have discussed above that this token is added over the tron blockchain by the collaboration with the BitGO company which control the price of this token by burning the token, This is a TRC-20 Token.

• Wrapped ETH(WETH)

The same goes for the WETH as WBTC because it is also controlled by the company BitGo by burning of the tokens, This is a TRC-20 Token.

• Wrapped TRX(WTRX)

This the the wrapped token for it's own native currency which is trx, but why we need a wrapped token for a token which is already preset on that blockchain, there must be some reason to do this.

As we know the tron is building their own defi ecosystem, But as we know trx is a trx20 token and there's no need to convert trx into wtrx, Whereas we can convert wtrx into any trc20 token using justswap.

• Wrapped BTT(WBTT)

BitTorrent (BTT) it is a TRC 10 token which is obviously works on tron blockchain but the wrapped BTT is a TRC 20 token so that it can be used over DeFi ecosystem.

QUESTION 5:

ANSWER 5:

Let's discuss Firstly about Minting of a wrapped token.

The mint process of wrapped token is the process in which a token gets converted into its wrapped token, generally minting is done so that they can be used over other blockchains to get benefits of other blockchains DeFi ecosystem.

Let's see the process details:

• The user makes a request for his token to be get converted into that wrapped token.
• Now the user send the token to the Merchant.
• Now the merchant request the custodian the amount of wrapped token requested by the user.
• Now the custodian gets the token sended by the user and starts to mint the wrapped tokens.
• Now the minted tokens will be sended to the merchant and then merchant to the user.

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Let's discuss about the burning of wrapped tokens:

The burning of token is the process in which the wrapped token is transformed into its normal token form or we can say original token, it is just opposite process as of minting, when user doesn't want the wrapped token and want it's original token form then the user burn wrapped token to get original token.

Let's discuss the process details:

• The owner of wrapped token request for the original token.
• Now merchant will request the custodian for burning of the wrapped token
• Now after the burning of wrapped tokens the custodian will send the original token in the same amount as of wrapped token to the merchant and then merchant will send the original token to the user.

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What is your function?

As we know the tokens are made for a particular blockchain and they are bound to that particular blockchain. This is the issue that was solved by introducing the wrapped tokens, these wrapped tokens are introduced to another blockchain to be used over that blockchain, these wrapped tokens has same value as of original token. Wrapped tokens allow a asset of another blockchain to be used over another blockchain, they help to fill the gap between different blockchains. They often have higher transaction speed and offer lower transaction fees.

Wrapped token make it easy for a user to use different asset of different network to be used over another blockchain and take the benefits of that blockchain Dapps and DeFi ecosystem with our assets from other blockchain.

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Create an example explaining the process.

Let's assume a trader has X amount of BTC and he want to use his BTC over DeFi ecosystem of Etherium blockchain, but he's not able to do so because BTC is not a Etherium based token, it is a bitcoin blockchain token, so what will he do he need to convert his BTC into wrapped BTC and to do so he need to use any exchange or merchant which will do for him, for this the user makes a request his X amount of BTC to be get converted into X amount of WBTC, Now as soon as the merchant receives the request ot will request the custodian for the same and mint X amount of WBTC in exchange of his X amount of BTC, After minting the WBTC the coins will be sended to the traders wallet through the merchant.

Now the trader is able to use the benefits of other blockchain with the asset he holds on another blockchain.

Now the trader is done with the usage of the DeFi ecosystem, where he uses his X amount of WBTC now the user want his BTC back and want to store his BTC over his previous blockchain so he will again make a request to the merchant and the merchant will request the custodian for the BTC in exchange of WBTC now the custodian will burn the WBTC and the trader will receive the amount of BTC he requested into his wallet through the merchant.

^{Minting and Burning Process Source}

To use your asset over another blockchain so that u can take out the benefits which other blockchain offers, you can use that asset by converting them into native wrapped token that can be used over that blockchain and their price is same in the ratio 1:1, our token can be converted into wrapped token by the help of merchant and custodian and then your asset will get reflected into your wallet balance.