💡 Understanding Wrapped Tokens

Sponsored by

‎ ‎

Hey Learners! 📚 They say you learn something new every day, and that’s true.. if you’re a Waivly Learn reader.

It’s that time of the day where you get to learn something brand new or level up your knowledge and skills on a topic you’ve already started to explore.

Today, we’re learning about wrapped tokens. Let’s dive in!

TODAY’S LESSON

^{_{EXPANDING CRYPTO ACROSS MULTIPLE CHAINS}}
Understanding Wrapped Tokens

Wrapped tokens act like digital stand-ins, letting cryptocurrencies move across blockchains where they wouldn’t normally work. Imagine Bitcoin on Ethereum—it doesn’t naturally exist there, but with Wrapped Bitcoin (WBTC), it can. Each WBTC is backed 1:1 by real Bitcoin, held securely in reserve. This makes wrapped tokens a bridge between otherwise isolated ecosystems.

Creating a wrapped token involves locking up the original asset and issuing an equal number of wrapped tokens on another chain. When you want to switch back, the wrapped tokens are burned, and the original asset is released. This ensures their value stays tightly linked to the real thing.

Wrapped tokens aren’t new cryptocurrencies—they don’t have their own blockchain or network. Instead, they’re representations of existing assets, like Bitcoin or Ethereum, adapted to work in different environments. They rely on smart contracts or custodians to keep everything in sync.

^{_{LESSON SPONSORED BY}}
Morning Brew

The gold standard of business news

Morning Brew is transforming the way working professionals consume business news.

They skip the jargon and lengthy stories, and instead serve up the news impacting your life and career with a hint of wit and humor. This way, you’ll actually enjoy reading the news—and the information sticks.

Best part? Morning Brew’s newsletter is completely free. Sign up in just 10 seconds and if you realize that you prefer long, dense, and boring business news—you can always go back to it.

Join 4.3 Million Readers Now

There are two ways wrapped tokens are managed: custodial and non-custodial. Custodial versions depend on a centralized entity to hold the reserves and issue new tokens. Non-custodial versions use decentralized protocols and smart contracts, removing the need for a middleman.

Not all wrapped tokens are the same, even if they represent the same asset. Wrapped Bitcoin on Ethereum (WBTC) and Wrapped Bitcoin on Binance Smart Chain (BTCB) both mirror BTC, but they follow different rules and can’t be swapped directly. Their usefulness depends on which ecosystem you’re working in.

Moving wrapped tokens between blockchains requires a bridge—a protocol that transfers assets across networks. Without a bridge, a wrapped token is stuck on the chain where it was minted. This makes interoperability tricky, adding extra steps to cross-chain transactions.

While wrapped tokens solve a major compatibility problem, they’re not a perfect fix. They rely on third-party mechanisms to maintain trust, and as blockchain technology evolves, newer solutions like cross-chain messaging and multi-chain assets might eventually replace them.

LEVEL UP YOUR LEARNING

^{_{ACCESS EXCLUSIVE COURSES, LESSONS, AND MORE}}
Become a Learn Plus member

As a Waivly Learn Plus member, you gain exclusive access to:

• Exclusive access to courses 🎓

• Members-only lessons 📖

• Private community access 🌐

• Personalized learning assistance 🤝

• Advanced professional development training 🚀

• And much more 🎉

Waivly Learn Plus is designed to elevate your growth through exclusive access to courses and members-only lessons that target essential skills and knowledge. With advanced professional development training, you'll gain practical tools to accelerate both personal and professional success, empowering you to continually expand your expertise.

Alongside our premium content, you'll be part of a private community of driven learners and experts who share your commitment to growth. Here, you can connect, exchange insights, and find support as you work toward your goals. Join Waivly Learn Plus today to transform your learning journey with the resources and connections you need to thrive!

UNTIL NEXT TIME

^{_{THANKS FOR READING}}
That wraps up today’s Waivly Learn lesson

We hope you enjoyed today’s lesson 🙌 Let us know if there’s a topic that you want to learn about that you haven’t seen from us. Want to share feedback or suggestions? Respond to this email‏ - We read every reply! Make sure to follow us on X, TikTok, YouTube, Instagram, and LinkedIn for more from us each day - We’re @Waivly everywhere!‎‎