What is Wrapped Ether?
Crypto Glossary Definition
Wrapped Ether (WETH) is an ERC-20 token backed by Ethereum. Since Ethereum existed before the ERC-20 standard, it is not natively compatible as a token, and a smart contract must be used to achieve this. Wrapped Ether allows ETH to be directly exchanged for an ERC-20 token without a trusted third party.
Why Wrapped Ether Matters
Wrapped Ether (WETH) is an ERC-20-compatible version of ETH, needed because many DeFi smart contracts are built to expect ERC-20 tokens and can't directly interact with native ETH — wrapping and unwrapping between ETH and WETH is a 1:1, no-loss conversion.
Wrapped Ether in Practice
A developer building a decentralized exchange runs into a technical snag: the smart contract standard most DeFi protocols are built around, ERC-20, requires tokens to follow a specific interface, but ETH itself predates that standard and doesn't natively conform to it. To let users trade ETH against other tokens through the same standardized contract logic, the exchange requires users to first convert their ETH into Wrapped Ether by sending it to a simple smart contract that locks the ETH and mints an equal amount of WETH in return, a process that happens instantly and at a fixed one-to-one rate with no market pricing involved. From the user's perspective, WETH behaves identically to any other ERC-20 token, meaning it can be approved for spending, swapped, or supplied as collateral using the exact same functions that handle every other token on the platform, without the exchange needing separate custom code just to handle native ETH. When the user is done and wants plain ETH back, they simply unwrap the WETH through the same contract, burning the wrapped tokens and releasing the original ETH. This conversion is so routine that many wallet interfaces handle the wrap and unwrap steps automatically behind the scenes, so casual users may go through several wrap cycles without ever noticing WETH by name.
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