Difference between ETH vs. WETH

ETH (Ethereum)
WETH (Wrapped Ethereum)

WETH follows what’s referred to as the ERC-20 trendy, even as ETH does now no longer. WETH was created due to the fact ETH became now no longer viable for use for numerous DeFi applications. Thus, wrapping the ETH token in an ERC-20 well suited trendy intended that it is able to without problems be used throughout the extensive spectrum of dApps. Also, because of this customers can create their personal variations of tokens for his or her custom DeFi applications.

Now, withinside the case of WETH, it’s far equal to ETH. This way there may be no fee distinction among ETH and WETH. Thus, if you want to use your ETH to take part on a custom dApp, you may without problems convert it into WETH on a dApp, like 1inch, after which retain the use of it.

Remember that ERC-20 is a technical trend for issuing tokens at the Ethereum blockchain. It most effectively dictates the houses of the token. One of the maximum vital components of an ERC-20 token is that it’s far fungible, this means that that one token will usually be exchangeable for some other one of the equal value.

Does wrapped tokens work?

Now that you understand the difference between ETH and WETH, let’s understand how wrapped tokens work. Normally, when you create a wrapped version of a token, you send the native asset to a central repository (ideally a smart contract). This centralised entity can be anything from multisig wallets to DAOs to smart contracts (for Ethereum).

Here’s how the process works:

1. Let’s say you need to use WETH on Ethereum. In this case, simply connect the wallet holding ETH to a decentralized exchange such as 1 inch.
2. After connecting the wallet, all you have to do is determine the amount of ETH to convert to WETH and exchange tokens.
3. After that, you will receive WETH in return for the ETH you sell. It can be used for decentralized applications that you need.

For a centralized entity, this is easy in the sense that when you receive a native asset, you burn it and create a wrapped version on the non-native blockchain. If a user wants to return a non-native asset and convert it to the original asset, simply burn the packaged asset and imprint the native asset on the original network.

The goal of all wrapped tokens is to add a layer of interoperability between different networks. Converting non-native assets such as BTC to ERC20 compatible tokens (such as USDT) and then to WBTC does not make sense for most users. In most cases, they simply use USDT to perform most transactions. However, WETH’s goal is to create the most seamless experience possible for native ETH users.

In short, there is no difference between ETH and WETH, as the latter is simply a “wrapped” version of the former. For cryptocurrencies, the “wrapped” token is just an empty jar containing the original asset. The wrapping process helps you to use non-native assets on any blockchain. Consider using BTC on the Ethereum blockchain.

Most blockchains are silos in their own right, so they do not provide fluid interoperability or the ability to transfer native tokens from one blockchain to another. As you can imagine, this can be frustrating for certain types of cryptocurrency holders.