Weth Crypto
What is WETH?
It’s likely that you have encountered “WETH” as one of the well-known cryptocurrencies available for trade if you have ever utilized a decentralized exchange (DEX). Wrapped Ether is referred to as WETH. The native coin of the Ethereum blockchain, the most well-known and established blockchain with general-purpose smart contracts, is called Ether (ETH).
What is Wrapped Ether (WETH)?
One Ether (ETH) is represented by the Ethereum ERC-20 token WETH. Transactions on the Ethereum blockchain are paid for using ETH. On an Ethereum-based DEX, for instance, switching between cryptoassets will cost a small sum of ETH. The two primary distinctions between ETH and WETH are that ETH is not an ERC-20 token and WETH cannot be used to pay for transactions.
What is the need for Wrapped Ether (WETH)?
Smart contracts, which are essentially decentralized programs, are the foundation of decentralized finance (DeFi). ERC-20 coins are intended to be handled by those smart contracts. ERC-20 is a widely accepted token standard, a sort of blueprint that is interoperable with several different blockchains, like Avalanche and Polygon, in addition to the Ethereum blockchain. Software may be built more efficiently thanks to the ERC-20 standard. For instance, it eliminates the need for custom code to handle each new token. ETH is not ERC-20 compliant since it is the native currency of Ethereum and because it existed before the ERC-20 standard was created. This implies that in order for any DeFi decentralized application (DApp) to accept ETH, custom software would need to be built. To enable ETH to be efficiently supported by any DApp that supports ERC-20, a smart contract that encapsulates ETH in an ERC-20 wrapper was instead created.
How is WETH created?
The technical aspects of WETH’s creation are rather straightforward. The WETH smart contract accepts ETH deposits from anybody, and it generates and returns the equivalent quantity of WETH. Additionally, this procedure is reversible. When WETH is deposited into the contract, it will be destroyed and an equivalent amount of ETH will be returned. The smart contract guarantees that any WETH created is backed by an equivalent quantity of ETH and is uncontrollable. As a result, WETH and ETH are nearly identical in terms of market value.
