What Is the Role of a 'Custodian' or 'Merchants' in the Wrapped Token Process? ▴ Learn

What Is the Role of a ‘Custodian’ or ‘Merchants’ in the Wrapped Token Process?

In the case of Wrapped Bitcoin (wBTC), custodians hold the actual Bitcoin reserves, ensuring the 1:1 backing of wBTC. Merchants are authorized entities that interface with the custodian.

They are responsible for verifying a user's identity, initiating the minting and burning of wBTC, and distributing the wrapped tokens. They are crucial for maintaining the peg.

What Is the Collateralization Ratio for a Fully-Backed Wrapped Asset?

How Does a Token’s “Burning” Mechanism Affect Its Utility or Security Classification?

How Does the ‘Proof of Reserves’ Mechanism Relate to Custodian Transparency?

How Does a “Wrapped” Token Maintain Its Peg to the Original Asset?