Wrapped Token
Quick Answer
A wrapped token is crypto pegged to another asset on a different chain (e.g., WBTC is Bitcoin on Ethereum), enabling cross-chain liquidity for payments and DeFi.
Full Definition
A wrapped token is a cryptocurrency pegged to another asset's value, usable on a different blockchain. For example, WBTC is an ERC-20 token on Ethereum backed 1:1 by Bitcoin in custody. Wrapped tokens enable cross-chain liquidity — a Bitcoin holder can use WBTC in Ethereum DeFi and payment flows without selling BTC. Wrapping and unwrapping is handled by custodians or decentralised bridges.
Related Terms
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Web3
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