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

A token pegged to an external asset, used to enable derivatives trading on assets that are not native to the smart contract's host blockchain.
Greeks.Live08.11.25

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

A wrapped token is a cryptocurrency pegged to the value of another cryptocurrency or asset, usually one that originates on a different blockchain. It is "wrapped" in a smart contract that allows it to be used on the host blockchain (e.g.

Bitcoin wrapped for use on Ethereum). In derivatives, wrapped tokens are used to enable trading of derivatives on assets that are not native to the smart contract's chain, expanding the range of tradable underlying assets.

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