If you're interested in knowing more about Ethereum (ETH), you may have come across mentions of Wrapped Ethereum (WETH). But what is wETH coin? How to convert ETH to WETH?
What is wETH coin?
WETH is an ERC-20 token on Ethereum pegged to the price of Ether. While Ethereum's native token ETH, can be used to pay gas fees, WETH can't. But WETH has a wider range of uses than Ether and has become very popular in the Decentralised Finance (DeFi) ecosystem. Pretty much any wallet in the Ethereum network will support WETH.
On Ethereum, almost all fungible tokens follow the ERC-20 standard. This simplified token launches and made all tokens on the blockchain comparable to each other.
Unfortunately, the Ether token itself does not comply with the ERC-20 standard. WETH solves this problem.
For example, most Defi DApps now accept ERC-20 tokens for investment and staking opportunities. If you want to add ETH to a liquidity pool or use it as collateral, it is easier to have it in an ERC-20 version, which brings WETH into play. This provides the most compatibility across the blockchain and saves time developing new smart contracts.
How Does WETH Work?
Smart contracts are the core of the dApps that run decentralized finance (DeFi) on the Ethereum blockchain. The native token of the Ethereum blockchain—Ether—is used to pay for the operation of these dApps and smart contracts on the blockchain.
Here's where WETH comes in. While Ether usually runs dApps and smart contracts on Ethereum, it doesn't always integrate seamlessly with every single, smart contract or dApp.
WETH allows ETH to be universally compatible across all dApps and smart contracts. ETH and WETH trade 1-to-1 and ETH can be converted to WETH and back again—or “wrapped,” in the jargon of Ethereum—at any time. Besides transaction fees, there are no additional costs involved.
While the technical details regarding the intrinsic differences between ETH and WETH are complex, the concept is intuitive.
How to Convert ETH to WETH
Ethereum users convert ETH into WETH via a process known as wrapping.
Wrapping involves sending Ethereum to a smart contract that provides WETH in return. Your ETH, which will be locked up in the smart contract as discussed above, will be visible on the blockchain in this contract, while WETH will be credited back to your crypto wallet in return.
Interacting with smart contracts directly is quite technical. A common way to carry out the wrapping is via a decentralized exchange, such as Uniswap (UNI).
This involves connecting a crypto wallet like MetaMask to a decentralized exchange like Uniswap. Hit the “Connect Wallet” in the top right corner of the exchange, as seen in the below image. Then select ETH as the asset to be swapped, and then presto , WETH is the asset received.
It's worth noting that the user will need to hold some ETH in their wallet to pay gas transaction fees. Gas fees are denominated in ETH rather than WETH.
Following this transaction, the WETH will sit in the same wallet that you connected to your chosen decentralized exchange (DEX) in place of the ETH.
Now I hope you get a better understanding of wETH, after reading this article "What Is wETH Coin? How To Convert ETH To WETH?".
