Wrapped Tokens - Crypto Academy / S4W6 - Homework post for pelon53.
Hello Professor @pelon53. Thanks for the class for this week. Here is my submission.
Q 1. Name at least 2 Blockchains that use the Wrapped BTC, excluding Ethereum, and show screenshots. Explain
Has anyone ever been frustrated by the fact that they can't purchase BTC on Ethereum? Is ETH available on the Binance Smart Chain? A coin's value cannot be moved from one blockchain to another. Wrapped tokens are a solution around this restriction and allow non-native currencies to be used on a network.
What is a wrapped token?
A wrapped token is a currency that has been specially adapted. Its information is linked to the coin it symbolizes, and it may usually be exchanged (unwrapped) at any time. It typically refers to a coin that isn't unique to the blockchain on which it was created.
Wrapped tokens are identical to stablecoins in the sense that they draw their value from some other coin. In the case of a stablecoin, this is generally fiat money. In the context of a wrapped token, it's generally a currency that lives on that other network.
2 Blockchains that use the Wrapped BTC.
- In Binance Smart Chain
BTCB is a BEP2/BEP20 asset wrapped (assigned) on Binance Chain/Binance Smart Chain with a 1:1 peg to Bitcoin. BTCB is run on permission, centralized approach. The 1:1 ratio indicates that the quantity of BTCB contained in a public address is the same as the quantity of BTC wrapped in a public address. Binance is the provider of the wrapped BTCB coins due to the centralized and integrity architecture. It is our responsibility to maintain the safety and accountability of the assets.
The live Bitcoin BEP2 price today is $57,002.26 USD with a 24-hour trading volume of $99,990,707 USD. We update our BTCB to USD price in real-time. Bitcoin BEP2 is up 2.35% in the last 24 hours. The current CoinMarketCap ranking is #33, with a live market cap of $5,990,631,590 USD. It has a circulating supply of 105,095 BTCB coins and the max. supply is not available.
- Tron Blockchain.
The Tron Blockchain is well-known for having low networking trading costs. Within the Tron blockchain, DApps that utilize the TRC-20 token standards, which is comparable to the Ethereum ERC-20 standard, are hosted. Wrapped tokens were designed to operate on the Tron blockchain in response to the rising demand for connectivity across blockchain systems, allowing tokens belonging to other blockchains to be utilized in DApps constructed on the Tron network.
The live Bitcoin TRC20 price today is $57,188.09 USD with a 24-hour trading volume of $6,244,913 USD. We will update our BTCT to USD price in real-time. Bitcoin TRC20 is up 2.95% in the last 24 hours. The current CoinMarketCap ranking is #2774, with a live market cap of not available. The circulating supply is not available and a max. supply of 21,000,000 BTCT coins.
Question 2
What is the difference between the wETH of the Ethereum platform and the wETH of the TRON platform? Explain.
The wETH of Ethereum is not the same as the wETH of TRON. I'm going to discuss their distinctions in this section of the inquiry.
To begin with, the Ethereum network initiated wETH of the Ethereum. When the necessity comes, they produced this Wrapped token. ETH was supposed to be utilized for ERC-20, but it wasn't compatible, so they had to create wETH. The TRON network's wETH was built by Bitgo, a custodial firm that introduced wETH and wBTC on the TRON blockchain in January 2021.
wETH is an Ethereum wrapped token that can be used in any ERC–20 project. While the TRON blockchain's wETH is a form of TRC-20 wrapped token.
By withdrawing their ETH and converting it to ETH, users can directly swap ETH for wETH on the Ethereum network. As a result, they are unable to burn any gas. However, on the TRON network, wETH of the Tron may only be minted to TRC–20 and must be burned when the user or merchant wants to convert it to the native token. In essence, wETH of Ethereum does not require burning during conversion back to a native Ethereum token, whereas wEth of TRON does require burning during conversion back to a native Ethereum token.
The Ethereum wETH token can only connect with projects developed on the Ethereum blockchain, while the TRON wETH token can only engage with projects built on the TRON network.
Another distinction is that when wETH of Ethereum is exchanged with other ERC-20 tokens, there is a low gas fee. This is due to the fact that the activities are performed on the same bitcoin blockchain. The TRON's wETH, on the other hand, is quite high.
Furthermore, because the interaction is within the same blockchain, the unwrapping process of wETH on the Ethereum blockchain is simpler and easier. However, because TRON is not a blockchain, it may be more challenging.
Question 3
Make an investment of at least $ 5 of a Wrapped token. Explain the process with screenshots. You can use the JustSwap platform.
My first step is to access my TronLink wallet. I'm interested in using the JustSwap dApp because it's a simple platform to use and I'll be able to fund my transactions with TRX from post payouts.
I was taken to the swap page on the JustSwap dApp. I placed an order for 60 TRX worth of WBTC.
To complete the transaction, I pressed the swap button.
A popup appeared, informing me of the liquidity cost and requesting confirmation of the swap.
Another pop-up appeared, asking me to confirm the swap and see how much bandwidth I'd be using.
A pop-up window appeared, prompting me to enter my password.
The following is an update on the swap's progress.
In my TronLink wallet, I have 0.000097 WBTC, which is worth $5.763.
Question 4
Explain in detail the Wrapped Token of the TRON Blockchain. Show screenshot
Justin Sun invented the TRON Blockchain. TronLink is the blockchain's wallet, and TronScan is the blockchain's block explorer. It needed to create an exchange for its various tokens so that they could be swapped. Justswap is an example of a decentralised exchange where TRC-20 tokens can be swapped. According to Tronscan, there are four validated wrapped tokens on the TRON blockchain, which are as follows:
wBTC, wETH, wBTT, and wBTRX are examples of cryptocurrencies. I mention this because, according to Tronscan, there are 50 wrapped tokens on the Tron blockchain, but only four have been validated, so I'll focus on those.
- Wrapped BTC ( WBTC)
Normally, the BTC coin is only found on the Bitcoin blockchain. In addition, a large number of investors and dealers have entered the BTC market. The Tron Blockchain inked a deal with BitGo to allow them to utilize their investment regardless of which blockchain they were on. BitGo agreed to manufacture wrapped tokens for usage on the Tron Blockchain as part of the deal. BitGo's role was to operate as a custodian of the tokens, ensuring that they were all pegged at 1:1. It's worth noting that these newly produced tokens adhere to the TRC-20 standard.
- Wrapped ETH (wETH)
On the Tron blockchain, Ether has also been wrapped for use. BitGo, the coin's custodian, is responsible for its mining. They are in responsibility of ensuring that the wETH remains tied to ETH in a 1:1 ratio. They're also in charge of tossing the tokens into the fire.
- Wrapped TRX (WTRX)
The TRX is the Tron network's native coin. It is utilized to power all of the platform's transactions. However, because the majority of its popular exchanges deal with TRC-20 tokens, a demand for a TRC-20 version developed. Some argue that this is pointless because TRX is already supported by DeFi systems. In a 1:1 ratio, the value of wTRX is tethered to the value of TRX. The Tron network is used to wrap it.
- Wrapped BTT (WBTT)
BTT started out as a TRC-10 token on the Tron network. This currency is utilized to power a more efficient BitTorrent protocol when it comes to BitTorrent speed. As a regular TRC-20 token, WBTT is the tokenized version of it. In a 1:1 ratio, the two tokens are pegged to each other. This makes trading with other TRC-20 tokens more easier. The Tron network is used to wrap it.
Question 5
What is to mint a Wrapped token? What is burning a Wrapped token? What is your function? Create an example explaining the process.
When a native token is exchanged for a wrapped token, the wrapper token's custodian or wrapper must produce the token. This is made by a procedure known as minting. The merchant must begin the minting of a wrapped token, while the custodian or wrapper does the actual minting.
The process of minting involves:
The merchant starts the process by informing the custodian that he wants wrapped tokens.
The request is received by the custodian or wrapper, who agrees to mint the token.
Contracts are used to reach an agreement.
The wrapped token is given to the merchant.
source
If a user or merchant requests 0.4WBTC, for example. He will begin the minting procedure. He'd have to sign a contract. He would then send the custodian 0.4BTC. The custodian will then mint the token and return it to the merchant, along with a smart contract. The merchant would then be paid 0.4WBTC.
Burning is the process of converting a wrapped token back to its original form. WBTC, for example, is a wrapped bitcoin. Burning is the method that a merchant or user will employ to convert his WBTC to BTC. As a result, minting is the polar opposite of burning. This time around, the merchant will make a request in the form of a burn. He'll burn the token from his own address. The supply of wrapped tokens in circulation is reduced as a result of this operation.
The processes for burning are:
- Begin the process of burning.
- Sign an agreement confirming your desire to burn your wrapped token.
- The custodian's confirmation of the request
- The native token is given to the Merchant.
The merchant wallet address is where the burning takes place. For example, if a user or merchant wishes to burn his 0.4WBTC, he must first sign an agreement, after which the custodian must also confirm the burn, and 0.4BTC will be given to the merchant. The supply of WBTC in circulation is reduced when it is burned.
Conclusion
Wrapped tokens have become popular due of their versatility. Because each blockchain is unique, and what happens in a blockchain cannot be seen by others. However, thanks to the use of wrapped tokens, blockchains may now communicate with one another. Wrapped tokens were established to promote the adoption of Defined Contribution (Defi) apps on blockchains.
Wrapped tokens are thus like bridges that connect blockchains and boost the use of Defined Apps. Wrapped Bitcoin, wrapped Ethereum, wrapped BNB, and other popular wrapped coins are just a few examples.
Professor @pelon53 deserves credit for bringing this course to my attention. I've picked up a couple of new skills. I'd seen most of these tokens before but had no idea what they meant. However, I now have a better knowledge of what they are and what they are used for.
CC : @pelon53
Written by @mustafa
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