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What Is a ‘Wrapped’ Token and Why Is It Often Used in Token Pairs?

A wrapped token is a pegged asset on a different blockchain (e.g. wBTC on Ethereum) used in pairs to increase liquidity and composability.
Greeks.Live18.11.25

What Is a ‘Wrapped’ Token and Why Is It Often Used in Token Pairs?

A wrapped token is a cryptocurrency pegged to the value of another crypto asset, usually one that originates on a different blockchain. For example, Wrapped Bitcoin (wBTC) is an ERC-20 token representing Bitcoin on the Ethereum network.

It is used in token pairs to bring assets from incompatible blockchains into a single ecosystem (like Ethereum's DeFi), increasing liquidity and composability.

What Is the Relationship between Flash Loans and DeFi Composability?
How Does a Pegged Asset Pair (Like wBTC/renBTC) Minimize IL?
What Is “Composability” in DeFi and Why Are Token Standards Essential for It?
What Is a “Flash Loan” and How Does It Exploit Composability?

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