What is a wrapped token?
A Wrapped tokenA wrapped token is a token that stands in for another asset, backed one to one so it can be used where the original cannot.See it in the glossaryRead the explainer is issued in exchange for another asset and is meant to be worth exactly one unit of it. It lets the asset work where it otherwise could not. Because it follows the ERC-20 standard, every WalletA wallet is the app or device that holds your keys and lets you sign transactions and view your assets.See it in the glossary and app already knows how to hold, send and trade it.
A casino chip is the closest picture. You hand the cashier money, receive chips of the same value, and cash them in later. The chip is a claim on what sits behind the counter. The backing and whoever controls it decide how far you can trust the token.
Why do wrapped tokens exist?
Some assets do not fit the token shape that most apps expect. Two cases cover most of what you will meet.
The first is ETH itself. ETH is the native coin of Ethereum and predates the ERC-20 standard, so it has no approve or transferFrom functions. Apps written once for ERC-20 tokens need special handling to accept it.
The second is an asset that lives on another network. Bitcoin runs on its own chain, and Ethereum apps cannot read or move it. To use Bitcoin in Ethereum apps, someone must create a token on Ethereum that stands in for it.
Wrapping is a convenience for compatibility, not a new investment.
How WETH works
WETH is a Smart contractA smart contract is a program stored at an address on the blockchain that anyone can call and that runs exactly as written.See it in the glossaryRead the explainer that accepts ETH and issues the same amount of WETH. Each WETH is backed by one ETH held in that contract. Its on-chain name is “Wrapped Ether” and its symbol is WETH.
The contract has two main actions. deposit takes the ETH you send and credits you the same amount of WETH. withdraw burns the WETH you hand back and sends you ETH. Sending ETH straight to the contract also wraps it.
The exchange has no price. The contract does not look at markets, so there is no slippage, and you only pay the network fee. One WETH is always redeemable for one ETH, as long as the contract works as written.
The contract is not upgradeable, and no company is involved. Trusting WETH comes down to reading a short piece of code that many people have already read. This is also why a swap on a trading site often routes through WETH: the site wraps your ETH, trades the token, and unwraps it at the end.
How WBTC works
WBTC is an ERC-20 token on Ethereum that is meant to be backed one for one by Bitcoin held off-chain. Its on-chain name is “Wrapped BTC” and its symbol is WBTC. It uses 8 DecimalsDecimals tell you how many digits of a token amount sit after the decimal point, because contracts store whole numbers only.See it in the glossaryRead the explainer, the same precision Bitcoin uses, rather than the 18 that WETH uses.
A smart contract on Ethereum cannot hold Bitcoin, because Bitcoin lives on another network. Custodians hold the real BTC in wallets they control. Users do not deposit BTC directly. Approved merchants do, and the merchant then mints new WBTC. When WBTC is redeemed through a merchant, it is burned and the BTC is paid out.
With WETH you trust public code. With WBTC you also trust the custodians to hold the reserves and honour redemptions. In the Chainlink feed metadata used in the proof of reserves check, BitGo is the issuer and the reserve figure is self-reported. Since 2024, custody is spread across several jurisdictions with BiT Global. Who holds the BTC can change again, so check the current arrangement.
The proof of reserves guide shows how to compare reserve figures with the token supply.
Other wrapped tokens and cbBTC
Every wrapped token raises the same two questions: what is the backing, and who controls it. cbBTC is another wrapped Bitcoin, issued by Coinbase and available on Ethereum and Base. It does the same job as WBTC with a different issuer and custodian.
Wrapped versions also appear when a token moves between chains. A BridgeA bridge moves value between two blockchains, usually by locking tokens on one chain and issuing matching tokens on the other.See it in the glossary locks the original on one chain and issues a stand-in on another. You rely on the bridge to keep its side of the deal.
Judge a wrapped token by its contract AddressAn address is the public identifier of a wallet or contract on Ethereum, a long string starting with 0x.See it in the glossary and its issuer, not by its name or symbol.
See it on a real contract
The card shows the ETH held by the WETH contract, which equals the WETH in existence. Paste 0xC02aaA39b223FE8D0A0e5C4F27eAD9083C756Cc2 into the ERC-20 Inspector to see Wrapped Ether with 18 decimals, or 0x2260FAC5E5542a773Aa44fBCfeDf7C193bc2C599 to see Wrapped BTC with 8.
ETH locked in the WETH contract
Reading live from Ethereum
Inspect WETH in the ERC-20 inspector
Show the query
formatUnits(weth.totalSupply(), weth.decimals())Common mix-ups
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“WETH is a different coin from ETH.” WETH is ETH in token form, and the contract swaps one for the other one for one.
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“WBTC is Bitcoin.” WBTC is a token on Ethereum that represents Bitcoin. The real BTC sits on the Bitcoin network with custodians.
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“Wrapping is a trade, so it costs a spread.” The contract exchanges one for one at a fixed rate. You only pay the network fee.
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“The same wrapped token has one address everywhere.” Each chain has its own contract with its own address. Confirm the address for the chain you use.
Summary
- A wrapped token stands in for another asset at a one-to-one rate so that apps can handle it.
- WETH is ETH held inside a public contract, while WBTC is a claim on Bitcoin held by a custodian.
- A wrapped token is only as trustworthy as what backs it and who controls that backing.
For developers
You can read the supply of any wrapped token with one evmquery request, scaled by its own decimals(), which is 18 for WETH and 8 for WBTC. The proof of reserves check shows how to compare WBTC supply against its reserve figures.