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What Is a ‘Wrapped Token’ and Why Is It Necessary in a Multi-Chain Environment?

A wrapped token is a pegged asset allowing non-native assets (like BTC) to be used on other blockchains (like ETH DeFi).
Greeks.Live16.11.25

What Is a ‘Wrapped Token’ and Why Is It Necessary in a Multi-Chain Environment?

A wrapped token is a cryptocurrency pegged in value to another cryptocurrency from a different blockchain. For example, Wrapped Bitcoin (wBTC) is an ERC-20 token representing Bitcoin.

It is necessary because it allows non-native assets to be used on a different blockchain's ecosystem, such as using Bitcoin's value in Ethereum's DeFi protocols. This increases liquidity and interoperability across chains.

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