🎁 How it Works: Wrapped Ethereum

Today's Highlights

• Bridging the gap between old and new
• Blockchain jobs - a listing of fresh jobs related to web3/blockchain/crypto.
• In Other News - a few interesting developments we're tracking.

Bridging the gap between old and new

Currently, many traders that use the Ethereum network are familiar with the ERC-20 technical standard that allows them to trade and invest in tokens that use it. But the problem is that Ether and ECE-20 tokens don’t follow the same rules, since Ether was created long before the ECE-20 standard.

In order to make cryptocurrency more accessible and bridge the gap between exchanges of Ether and ECE-20 coins, the Ethereum network introduced the concept of wrapped Ethereum (wETH).

Wrapped Ethereum is just Ether coins wrapped with ERC-20 token standards. The price of wETH is pegged 1:1 with regular ETH coins, so the exact same monetary value is being traded. One of the main benefits of wETH is that it solves the interoperability issues of the Ethereum blockchain and also enables for easy exchange of one coin with another.

Wrapped Ethereum coins are created by sending regular ETH coins into a smart contract. That contract will then create the wETH coin, while keeping the ETH coin locked up so that the wETH is backed by a reserve. The goal of wETH is to develop the Ethereum network technology enough that wrapping the Ether coin won’t be necessary for interoperability.

Wrapped Ethereum tokens make it possible for the coin to interact with other blockchains, and that is very important in building a more democratic digital economy. Even though the eventual plan for wrapped coins is to phase them out, they are still important, and will be for years to come as it provides valuable service to people who are in need for cross-blockchain exchanges.

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