Steemit Crypto Academy Season 4, week 6- Intermediate course|: Wrapped Tokens

There’s no one unaware of the Binance smart chain who’s into crypto, this smart chain is flourishing with every day passing. One of the important roles in the growth of this decentralized exchange is the presence of wrapped tokens as their availability attracts more investors and results in providing liquidity to exchange.

Binance Bridged, a project of Binance smart chain is what works on facilitating traders owning native cryptocurrency of different blockchain to communicate on Binance platform by providing wrapped tokens. This project assists you with trading your wrapped tokens on the Binance chain as BEP-20 or BEP-2 which is the token standard of the Binance smart chain.

Currently, there are wrapped tokens of several crypto assets integrated by Binance however I’ll stick to wrapped BTC as per requirement.

How to convert your BTC into WBTC in Binance Smart Chain

The Binance bridge converts original Bitcoin into wrapped bitcoin through peg-in feature i.e. which converts native token of any blockchain into Binance smart chain standard token which we in this case will convert BTC into wrapped BTC of BEP -20 Standard called Binance peg btcb token. This project of Binance also helps in converting the wrapped BTC back into its original currency by using the peg-out feature.

However, it is essential to own a wallet, after that you can select the chain i.e. BTC in this case that you want to turn into wrapped tokens.

Note: we get wrapped tokens equivalent to the quantity of original BTC we have.

Let’s gather all the data we can of the wrapped token on the Binance smart chain from the pictures below

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In the screenshot above we can see the current price of wrapped BTC is $57, 358, 28 with a total supply of 112,501. I have marked the name of this wrapped token along with the contract address which can be seen in the picture above.

Tron Blockchain

The second blockchain I will be mentioning which supports wrapped BTC is Tron. Tron is a decentralized and open-source blockchain founded by Justin Sun in 2018. However, in January this year, Justin Sun came up on Twitter and announced the availability of wrapped BTC and Eth on this blockchain by collaborating with BitGo.

We need to remember that the Tron ecosystem works with the TRC-20 standard token. Hence the Tron blockchain mints BTC TRC-20 tokens following the standard token required by the platform. The purpose of this initiative is to welcome BTC holders on Tron’s blockchain and gather more investors

Let us remember the price of the BTC TRC-20 standard token is similar to the rates of BTC's original price.

HOW TO GET wBTC in TRON

The wallets such as Just swap, Tronlink helps traders to see available wrapped tokens of different cryptocurrencies one must own these wallets to convert their BTC into wrapped ones. Remember that wBTC on Tron is the same as wrapped tokens of BTC on the Ethereum chain as they are initiatives of the same company. The original bitcoin currency is sent to the address provided by a company that initiated the wrapped token i.e. BITGO

Let’s gather the information provided about wrapped BTC on Tronscan

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In the screenshot above I have marked the price of WBTC i.e. $57387.224988 with a total supply of 99.890000964. I have also pointed out the contract address and the name of the token on the screenshot above.

What is the difference between the wETH of the Ethereum platform and the wETH of the TRON platform? Explain.

One might count the wEth of Tron being TRC-20 and wEth of Ethereum being ERC-20 token as different but since they are compatible and practically share similarities so this feature doesn’t add much difference between these two.
Although they sound the same one of the most important and noticeable differences between these two coins is discussed below

WETH OF ETHEREUM PLATFORM

• wEth of ethereum is an invention of ethereum blockchain used in ethereum platform was created due to non-compatibility of ERC-20 tokens on ethereum blockchain with simple eth tokens for transactions

• The wEth of ethereum blockchain doesn’t require the burning of eth coins as the users deposit their eth coins and attain wEth which represents Eth on Defi ecosystem of ethereum blockchain

• The wETH of ethereum are stable coins

WETH OF TRON PLATFORM

• wETH on Tron platform is an inventory of BitGo with the collaboration of Tron and doesn’t belong to ethereum which helps interaction of ethereum currency on other Tron’s atmosphere

• The wETH of the Tron platform requires burning to keep the economic circulation balanced and to protect transactions.

• The wEth tokens of Tron are not stable coins.

FINAL VERDICT

wEth of Tron and ethereum are under the control of two completely different owners i.e. BitGo controls the wrapped ethereum on Tron whereas ethereum blockchain itself has a complete hold on wrapped tokens of its native currency.

Make an investment of at least $ 5 of a Wrapped token. Explain the process with screenshots. You can use the JustSwap platform.

For this, I went to the already downloaded application of Tronlink on my phone. As you can see I already have 59.424 TRX in my wallet which is equivalent to $5.7. From the Tronlink wallet mobile app, I tapped on the Browse option where I can search the desired decentralized exchange since the required one was available in history therefore I selected the JustSwap platform from history. The steps can be seen in the picture below

Here in the picture below you can be seen I’ve entered JustSwap and I hold at least 9.424332 TRX. Here I will select the token I’m aiming to exchange. I here selected to change TRX with wrapped BTT coins which as you can see in the picture I’ll be getting 252.868772 WBTT in exchange for 9.424322 TRX coins. After clicking on swap they’ll ask me to verify my trade by confirming my swap where I’ll tap on “Confirm swap” as demonstrated in the picture below

After confirming the swap the application asked me to choose if I want a safe mood which I selected and then continued with my transaction. Next, I was asked to confirm my transaction of 9.424332 TRX which I did can be seen in the screenshots below

Once I tapped to confirm my transaction they asked me to enter my password as I selected safe mood. Once I entered my password my transaction now moved to the pending phase, which can be seen in the picture below

In less than a minute my transaction is completed i.e. I’ve successfully swapped my 9.424334 Trx for 252.927662 wBTT. After that I now successfully have 252.927662 wBTT coins in my Tronlink wallet that can be seen in screenshots below

Explain in detail the Wrapped token of the TRON Blockchain. Show screenshot.

Wrapped Tokens OF Tron

Tron is one of the popular open-source blockchains and working on its features every day. However to attract more investors and liquidity into their exchange Tron like other exchanges have taken the initiative of launching wrapped tokens to allow different currency holder trade using their platform. This initiative has included this platform in the list of blockchains that entertain multiple currencies.

This blockchain has a native token of its own called TRON denoted by TRX, along with the original form the platform also serves with a wrapped version of its native token denoted by WTRX. The reason for this wrapped token innovation was to produce aTRC-20 token which is the standard token of Tron blockchain as the native token Tron is a TRC-10 token.

However, apart from this, there are a few other wrapped tokens that Tron blockchain supports which can be seen in DEX just swap or Tronscan are as following

WBTC

These wrapped bitcoins are an inventory of Tron blockchain with collaboration with BitGo company as mentioned on Tronscan. It can be seen these wrapped coins have a 1:1 ratio with the original BTC i.e. 1BTC = 1WBTC

The total supply and price of these Wrapped bitcoins are also marked. They are TRC-20 tokens which are a standard token of the Tron blockchain.

WETH

The wrapped ethereum is also created by Blockchain on partnering with BitGo Company same as wrapped BTC. These wrapped Eth tokens are also equivalent to native Eth Tokens.

As it can be seen in the screenshot below them being TRC-20 coins meet the standard token requirement of blockchain

The total supply can be and the price of Wrapped tokens of ethereum can be seen as marked above. They might confuse you for being the same as that on ethereum but they are not as we already discussed the difference between two in question no: 2.

WBTT

They share the same characteristics as that of the native token “Tron” as its native token is also built on TRC-10 standard which is denoted by BTT. It is a TRC-20 token however the original BTT of TRC-10 was also available on blockchain but it is developed to be swapped with ERC-20 tokens. I’ve highlighted the total supply and price of wrapped BTT shown on the platform of Tronscan in the picture below

What is to mint a Wrapped token? What is burning a Wrapped token? What is your function? Create an example explaining the process.

The minting or burning of coins are processes which contrary or reversal of each other i.e. minting involves creating a wrapped token while burning is to get back the original digital coin in exchange for a wrapped coin of that currency. To know more let’s study them deeply

WHAT IS MINTING A WRAPPED TOKEN?

It is a process in which a trader sediments a certain amount of his owned cryptocurrency to a custodian who holds his currency and returns him wrapped tokens of that currency of the same worth as that of currency.

We have established from a lecture that it is not possible to use the native currency of a blockchain on a different blockchain, this is where the concept of generating or minting a wrapped token place as holding these wrapped tokens gives access to a trader to use them on other blockchains. It is made possible due to the availability of custodial services who essentially wraps or mint the asset a trader requests for under the smart contract

For better understanding let us understand the burning of BTC minting graphically from the picture below

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WHAT IS BURNING A WRAPPED TOKEN?

As I said above the burning of the wrapped token is a counter process of burning i.e. a trader owning a wrapped token goes to the custodian who’s in charge of holding the original currency and asks him to switch his wrapped token back to the original currency. The custodian would burn i.e. erase that wrapped coin from circulation and will return the trader his original cryptocurrency equivalent to the quantity of his wrapped token.

The key purpose of burning is to ensure the prevention of scams such as double spending and balance the economy throughout the crypto-sphere.

For better understanding let us understand the burning of wBTC graphically from the picture below

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FUNCTION

As we know the native coin of one blockchain cannot be traded on another because of zero communication between two blockchains. This is where the function of wrapped tokens is brought into practice i.e. they are minted to provide the facility of the interaction of a currency in other blockchains that support wrapped tokens.

UNDERSTANDING THROUGH EXAMPLE

Let’s suppose you as a trader holds BTC, you want them to trade using them on the Tron blockchain but cannot as there’s no communication between these tokens. Now you will go to the custodian who will freeze your BTC and return you an equal amount of wrapped bitcoins that are compatible to use on the Tron blockchain. Now once you’re done you want your native BTC coins back you’ll go back to the custodian who will not only return your BTC but also burn your wrapped BTC. The cycle can be understood through the image below

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Conclusion

From the whole lecture and research I concluded is

• How essential wrapped tokens however the concept of custodian involves third-party involvement in transactions which gives centralization vibes.

• The minting and burning of coin held my attention once I paid attention how important is for security reasons.

• The wrapped tokens are the cause of interoperability in the blochchains also providing liquidity and better scalability to them.

Regard
@aizazghumman