Insights into wrapped crypto

With over 1,000 blockchains worldwide, users benefit from a wide choice of crypto driven by competition. But how to allow customers to switch across networks seamlessly and to explore new horizons? Wrapped crypto is one of the ways to address this issue.

What is wrapped crypto?

Wrapped tokens are digital assets representing coins on non-native blockchains, allowing their use outside the original networks. For example, Bitcoin doesn’t exist on any other blockchain than its native one. Still, “wrapping” allows BTC to be used within other networks. For instance, Wrapped Bitcoin can be used on Ethereum.

How does wrapped crypto work?

First, the original cryptocurrency is locked in a secure reserve, often managed by a custodian or automated smart contract. Once the deposit is confirmed, an equivalent amount of the wrapped token is issued on the target blockchain. The reverse process, known as burning and unlocking, happens when the wrapped tokens are converted back into the original cryptocurrency.

What crypto is “wrapped”?

Cryptocurrency that originates on its native blockchain but also “exists” on another blockchain can be considered "wrapped." For example, POL and TON exist on their original blockchains but can also be exchanged to other blockchains — TON can be swapped to Binance Smart Chain (BSC), as well as POL can be switched to Ethereum network.