What Is Wrapped Ether? Complete wETH Guide

Wrapped Ether (wETH) is an ERC-20 compatible version of Ethereum’s native cryptocurrency, enabling interoperability within the DeFi ecosystem.

Written by: Anatol Antonovici   |  Updated December 11, 2023

Reviewed by: Mike Martin

Fact checked by: Ryan Grace

eth wrapped in foil

Ether, ironically, does not abide by the ERC-20 standard token, set forth by the Ethereum network. Wrapped ether, or wETH,  allows for transactions and interactions across decentralized applications by adhering to the widely-used ERC-20 token standard, which is not natively supported by ether (ETH).

Table of Contents

🍒 tasty takeaways

  • Ether (ETH) is incompatible with ERC-20 tokens because the token standard emerged months after the launch of the Ethereum mainnet and its native coin ETH.

  • DeFi applications use wETH instead of ETH because wrapped ether is interoperable with other ERC-20 tokens.

  • Ether can easily be converted to wrapped ether and vice versa via decentralized Web3 apps like Uniswap, MetaMask, or OpenSea.

  • You can buy wETH in the tastycrypto wallet by using the in-app swap feature. 

Wrapped Ether (wETH) Summary

What is wETH? Tokenized ether (ETH), using ERC-20 standard.
Ethereum Blockchain with smart contract capability.
Wrapped Tokens Crypto assets for interoperability between blockchains.
Working of wETH Used in DEXs, DeFi protocols, and for NFTs; not for gas fees.
How to Wrap/Unwrap Through DEXs like Uniswap, MetaMask, OpenSea.
wETH Advantages Interoperability, liquidity, DeFi opportunities.
wETH Cons Centralization risk, minting fees, risk of unpegging.
Current Value Pegged to ETH, currently $1,877.

What Is Ethereum?

Ethereum is a public blockchain network that supports the smart contract feature. Smart contracts allow anyone to create decentralized applications (dApps) that run on top of the Ethereum mainnet.

🍒 Smart Contracts Simplified

Ethereum’s ability to execute smart contracts (which Bitcoin can’t) and maintain robust decentralization through a widespread node network has solidified Ethereum as the frontrunner in decentralized finance (DeFi) – the most important and popular blockchain sector.

Source: DeFiLlama

The Ethereum blockchain has a native cryptocurrency, Ether (ETH). Ether is used to pay for transaction fees and computational resources. The network also supports several token standards to create cryptocurrency tokens on top of it. The most popular standard is ERC-20. Ether, coincidentally, does not abide by the ERC-20 standards, which is reserved for tokens, not coins. 

🍒 Crypto Coin vs Token: Here’s How They Differ

Today, there are hundreds of thousands of ERC-20 tokens. ERC-20 tokens are fungible, or interchangeable, sort of like fiat currency – any US Dollar is as good as the next just like any bitcoin is as good as the next.

ERC-721 tokens, however, are non-interchangeable. ERC-721s can be thought of as digital art in that they are not interchangeable. NFTs (non-fungible tokens) on Ethereum use the ERC-721 standard.

What Are Wrapped Tokens?

Wrapped tokens are crypto assets pegged to the value of an original cryptocurrency or token from another blockchain ecosystem. Wrapped ether is backed 1:1 with ether (ETH). Since wETH can be redeemed for ETH, the price of these two cryptos mirror each other. wETH maintains its peg to ether through the same mechanisms that stablecoins like USDT and USDC use.

The purpose of wrapped tokens is to bring interoperability between different blockchain ecosystems or token standards. Since many DeFi apps operate exclusively with ERC-20 tokens, making non-Ethereum assets compatible with this token standard would improve diversification and liquidity on these apps.

For example, one can get exposure to Bitcoin (BTC) without leaving the DeFi ecosystem by purchasing Wrapped Bitcoin (WBTC) on Ethereum.

What Is Wrapped Ethereum?

Wrapped Ethereum (wETH) is an ERC-20 token pegged to the price of Ether. What’s the point of it, considering that wETH stays on the Ethereum network as well?  

Since Ethereum dominates the DeFi space, most wrapped tokens are created on this network by leveraging the ERC-20 standard. However, Ether itself cannot be used on Web3 apps because it’s not compatible with ERC-20, which was developed after Ether.

Therefore, wETH is designed to bring interoperability and enable DeFi and dApps users to get easy exposure to ETH without leaving their ecosystem.

There are different versions of wETH on other blockchain networks, including Tron and Avalanche (with the ticker wETH.e). Most people, however, refer to wrapped ether as wETH, which is an ERC-20 token.

Ether (ETH) vs Wrapped Ether (wETH)

Here is a brief comparison between wETH and the original ETH:

eth vs weth table

How Does wETH Work?

wETH has the same attributes as all other ERC-20 tokens. However, wETH can not be used to pay for Ethereum gas fees. wETH is primarily used to trade against other tokens on decentralized exchanges (DEXs), provide liquidity on DeFi protocols, or buy non-fungible tokens (NFTs) through marketplaces like OpenSea and LooksRare.

To obtain wETH tokens, ETH holders send their cryptocurrency to a custodian. The custodian in turn mints new wETH. Custodians can be: