Steemit Crypto Academy Season 4, week 6- Intermediate course|: Wrapped Tokens

The integration of wrapped tokens in different blockchains is becoming increasingly popular. The introduction of wrapped tokens is basically to use the representation of an asset in a blockchain other than its native blockchain. Normally you cannot use any other token for enjoying Defi services on a blockchain but with wrapped tokens, this is becoming possible. In some blockchains such as Ethereum, you need ERC-20 tokens and that is why the WITH was created.

Popular blockchains that use wrapped tokens other than ETH and have listed WBTC are Tron and BSC.

Binance Smart chain

The project WBTC that converts the BTC to WBTC in the BSC is the Bridged project. it converts BTC and several other tokens into BEP-20 or BEP tokens on the platform which are the actual representation in terms of value to the BTC.

In the BSC you can convert BTC to WBTC and an address will be generated to which you deposit the BTC and this is done by connecting to a BSC supported wallet such as the Metamask and then a user sends the BTC to that address these BTC are then blocked and an equal amount of BTC is sent to the user this is called the peg-in process. After when the user wants the BTC back he sends the WBTC back and gets the TC the WBTC is then burnt. The Bridge process is wholly responsible for the minting and burning of the WBTC on the BSC.

The wrapped BTC on the BSC is called the Bitcoin BEP-2 of the BTCB. This has the same value as the BTC and can easily be used in the BSC.

Tron blockchain

With its promising services, the Tron blockchain is one of the rapidly emerging blockchain networks. Tron has also listed the WBTC. It allows the conversion of BTC to WBTC and back. The WBTC can be used in Defi protocols as it is a TRC-20 token.

The Custodian Company here is BitGo that is wholly responsible for the minting and burning of the WBTC. Here again, the user sends BTC to the BitGo which then converts it to an equal amount of WBTC and block the BTC. The WBTC is transferred to the user’s wallet after he signs a smart contract. During the peg-out process, the WBTC is sent back to BitGo which then releases the BTC and burns the WBTC. The user again has to sign a smart contract during this conversion.

These WBTC are TRC-20 tokens that are compatible with the ERC-20 tokens.

2.- What is the difference between the wETH of the Ethereum platform and the wETH of the TRON platform? Explain.

The differences between the WETH of the Ethereum platform and the wETH of the TRON platform are:

ERC-20 and TRC-20 tokens

WETH of the Ethereum platform was mainly designed to be used in the Ethereum smart contracts and the Ethereum Defi projects which require an ERC-20 token.

Whereas the wETH of the TRON platform was designed to be used on the Tron blockchain which require a TRC-20 token. Although TRC-20 and ERC-20 are compatible to each other ETH cannot be used in the Defi protocols of either the Ethereum blockchain or the Tron blockchain and the WETH was thus created.

Developing company and the process of burning

The other major difference between the two is that the WETH of the Ethereum platform is designed by the network itself to be used for its own deFi protocols and therefore does not require burning as it can simply be converted back to the ETH without affecting its value.

The wETH of the TRON platform is designed to be used outside the ETH ecosystem and is not developed by the ETH network. In fact, it is created by BitGo to allow users to have a representation of the ETH on the network. It hence requires burning as the Tron blockchain has to manage the value of the network by equaling the inflow and outflow of tokens. on the Tron blockchain, the users peg ETH to ge\

twETH and peg WETH to get ETH the WETH then are burnt to prevent double-spending and maintaining the price of the token.

3.- Make an investment of at least $ 5 of a Wrapped token. Explain the process with screenshots. You can use the JustSwap platform.

You can use any exchange account to buy wrapped tokens such as a centralized exchange like Binance or a decentralized exchange like JustSwap by connecting it to the Tronlink wallet. Here I am using my verified Binance account. Although we can use JustSwap or Tron link wallet but to my ease I used Binance.

I was already logged into Binance on the main page click on the wallets option then click on spot.

Here search WBTC click on WBTC/BTC pair and enter the amount

Click on Buy WBTC to buy the token

4.- Explain in detail the Wrapped token of the TRON Blockchain. Show screenshot.

There are two groups of wrapped tokens on the Tron blockchain those developed by the BitGo and those developed by the Tron Network itself. The main purpose of the development of the wrapped tokens on the Tron blockchain was to encourage more users on the platform. The wrapped tokens created on the tron blockchain are TRC-20 tokens.

Developed by BitGo

WBTC and WETH are the tokens that represent BTC and ETH respectively on the Tron ecosystem they are controlled, minted and burnt by BitGo. During the process of minting the users send their ETH or BTC to BitGo which then provides WBTC or WETH and during the conversion the WBTC and WETH are then again sent to BitGo. WBTC has the same value as BTC and WETH has same value as ETH as shown below.

Developed by the Tron Network

Here we have WTRX and WBTT. They are the wrapped tokens of BTT and TRX. TRX is also a TRC-20 token but the network has designed a wrapped token for it. BTT is on the other hand a TRC-10 token whereas the WBTT is a TRC-20 token which has the same value as the BTT. Their prices and supply are shown below

5.- What is to mint a Wrapped token? What is burning a Wrapped token? What is your function? Create an example explaining the process

Minting of a wrapped token is referred to as the process generate a token that can be used in another blockchain but that has the same price as the original token for which it was created. For example the WBTC is a wrapped token that has the same value as BTC. BTC can only be used on BTC blockchain but WBTC can be used on other platforms like Tron for the generation of smart contracts.

Burning refers to the process to destroy the wrapped tokens after they have been converted back to the original token to maintain the price of the token and security of the network.

For example

If I have 12 BTC and I want to perform some task on the Tron blockchain I will need TRC-20 tokens. For this I will send my BTC to BitGo through Tron link wallet and JustSwap DEX on an address of BitGo to receive an equal amount of WBTC. BitGo will take my BTC and block them and I will have to sign a smart contract and the 12 WBTC will be transferred to my wallet. This is called minting.

After that when I have done my task and I have further need for the WBTC I will send the remaining WBTC to the BitGo I will then again sign a smart contract. BitGo will release My BTC equal to the amount of WBTC and then will burn the WBTC to prevent double-spending and once burnt the tokens won’t be used again for any other transaction.

BitGo is the custodian here is responsible for maintaining the price of the token for the correct representation of the original token through the wrapped token and also for the burning and minting of the token.

Conclusion

Wrapped tokens represent original tokens in other blockchains. This maintains interoperability between different blockchains. This intercommunication of different blockchains is proving beneficial for the overall ease of decentralized financing and it is a positive step towards the growth of blockchain network.