Wrapped Token

A wrapped token is a type of token whose price corresponds 1:1 to that of another cryptocurrency, but changing the underlying code. This allows the same value to be “translated” into another language so that a crypto is compatible with a different blockchain standard.  

Wrapping is the process that converts cryptocurrencies into tokens, performed through software developed on blockchain. Specifically, the issuance of wrapped tokens is done by locking the original funds in a smart contract, which serves as a digital safe (vault), from which they can also be redeemed later. In order to recover the initial cryptocurrencies, in fact, the wrapped tokens will have to be destroyed by the custodial smart contract itself, through the burning mechanism. “Wrapping” a crypto into a token, then, is similar to issuing stablecoins in exchange for cryptocurrencies, only the wrapped tokens have variable value, not just unit value.  

Wrapped tokens are also a solution for blockchain interoperability: they allow separate, autonomous networks to communicate, thus increasing the use cases of their respective cryptocurrencies. The value of a Bitcoin (BTC), for example, can be represented by a wBTC (wrapped Bitcoin) on the Ethereum blockchain, so as to take advantage of DeFi’s functionalities. This transforms a Bitcoin into an Ethereum ERC-20 token, which can then be recognized by DApps; wBTCs, for example, can be used in Yield Farming strategies, such as staking

Correlated words

Liquid Staking

Staking mode that allows one's stake to be used in other protocols.


Total amount of crypto blocked in a DeFi protocol or decentralised application (dApp).


A process in which cryptocurrencies are blocked as a form of commitment to obtain benefits or the right to perform certain activities in a network.

Staking Derivative

Derivatives of staking systems whose value depends on the performance of the staked native tokens and the amount of rewards issued by the network

Yield Farming

A typical feature of decentralised finance (DeFi) that allows people to put their cryptocurrencies to work for a return.


The conversion of tokens into other tokens on a decentralised exchange.


Depositing and holding cryptocurrencies on certain blockchains to obtain cryptocurrency incentives.

Smart Contract

An agreement in digital form that allows actions to be triggered automatically if certain conditions are met.

Crypto Lending

A financial service that allows lending and borrowing cryptocurrencies on a centralised or decentralised platform


The Ethereum token standard that has enabled hundreds of projects to launch their own cryptocurrency on Ethereum.


A Decentralised Exchange allows cryptocurrency trading without intermediaries and directly on the blockchain.


Decentralised Finance includes all blockchain-based and decentralised financial solutions.


Decentralised application allowing the use of a blockchain-based service.


The Decentralised Autonomous Organisation is a form of automated blockchain governance.


Centralised finance is the centralised counterpart of DeFi, but should not be confused with traditional finance.


Buying and selling in different markets in order to take advantage of the disparity in prices.


A metric often used in DeFi, it indicates the percentage return per year you receive on an investment or loan.


The annual percentage rate you receive for an investment or loan.


Automated Market Makers are smart contracts adopted by decentralised exchanges to automatically execute orders.


An online collector of similar content or services from different sources for easy access. An example is Yearn Finance

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