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December 15, 2022

What is Wrapped Ethereum (WETH)?

If you're a cryptocurrency enthusiast, you may have heard of Wrapped Ethereum or WETH. But what exactly is it and how does it work? In this blog, we'll discuss the basics of WETH and why it's becoming increasingly popular in the crypto world.

Wrapped Ethereum (WETH) is an ERC-20 token based on the Ethereum blockchain. It's essentially a combination of Ethereum and ERC-20 tokens. By combining these two technologies, users can trade and use their ETH as if it were an ERC-20 token without having to actually convert their ETH into an ERC-20 token. This makes trading much simpler and more efficient because traders don't have to go through the process of converting their ETH into a different type of asset every time they want to trade.

The other advantage that WETH has over regular Ethereum is that it allows for direct interaction with decentralized finance (DeFi) applications. DeFi apps are built on top of existing innovative contract platforms like Ethereum, but often require transactions to be done in specific tokens like DAI or USDC instead of ETH. With WETH, users can wrap their ETH so that it can interact directly with these DeFi applications without needing to convert their ETH into any other form. This makes interacting with DeFi much easier and more accessible for everyday users.

Wrapped Ethereum also helps improve liquidity in the crypto markets since traders can easily convert between different types of assets without having to go through lengthy conversion processes. Additionally, WETH helps reduce transaction costs associated with traditional exchanges since there's no need to pay gas fees when converting between different types of assets on many decentralized exchanges (DEXs).

All in all, Wrapped Ethereum is a powerful tool for traders, developers, and everyday users alike looking to take advantage of the benefits offered by decentralized finance applications. By allowing users to wrap their ETH so that it can interact directly with DeFi apps and providing better liquidity options than traditional exchanges offer, WETH is quickly becoming one of the most popular tools in the crypto world today. Whether you're a new trader just getting started or an experienced investor looking for new ways to maximize your profits, understanding how WETH works can help ensure your success in this rapidly evolving industry.

Jacques Potts - Sr. Marketing Manager at Ledgible and experienced financial author, marketer, and crypto expert. His work has been featured on The Street, Project Serum, FirstTrade, and Invstr.
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