What Is a "Wrapper" Token and How Does It Relate to Composability? ⎊ Path

What Is a “Wrapper” Token and How Does It Relate to Composability?

A wrapper token is an ERC-20 token that represents an underlying asset that may not natively be ERC-20 compliant (e.g. Bitcoin or an NFT).

The wrapper token is created by locking the original asset in a smart contract. This makes the non-ERC-20 asset compatible with the vast ecosystem of DeFi protocols, enhancing composability by allowing it to be traded, lent, or used as collateral.

What Is the Difference between ERC-20 and ERC-721 Token Standards?

Explain How a Yield-Bearing Token Is an Example of DeFi Composability

What Is the Key Advantage of a Tokenized Option Being an ERC-721 (NFT) versus an ERC-20?

How Does an ERC-1155 Token Standard Combine Aspects of Both ERC-20 and ERC-721?

What Is a “Flash Loan” and How Does It Exploit Composability?

What Is a “Flash Loan” and How Does It Leverage DeFi Composability?

How Does ERC-1155 Improve Gas Efficiency over ERC-20 and ERC-721?

How Does a Token Standard like ERC-20 Fundamentally Differ from an NFT Standard like ERC-721?

Glossar

Wrapper Token

Conversion ⎊ A Wrapper Token is a cryptographic asset issued by a smart contract that holds an underlying, non-native, or non-standard asset in escrow, effectively converting it into a compliant, fungible token on a specific blockchain.

Composability

Synergy ⎊ Composability within cryptocurrency, options, and derivatives signifies the ability to combine distinct financial primitives ⎊ such as decentralized exchanges, lending protocols, and options vaults ⎊ to create novel and complex financial instruments.