[Wrapped Tokens] | Crypto Academy / S4W6 | Homework Post for @pelon53.
Introduction
Hello to everyone,
In this post, there is professor @pelon53 is assignment in this week's lesson. In this post, our topic will be Wrapped Tokens. Thank you to everyone who reads my post.
Question 1
Name and show screenshots of at least 2 Blockchains that use Wrapped BTC, excluding Ethereum. Explain.
Wrapped BTC tokens are an essential token for BTC investors. Because each token has a blockchain network running, and this Wrapped allows them to transact on different Dapps thanks to BTC tokens. In this way, BTC investors can enjoy the freedom to trade without losing their BTC tokens and can make certain profits.
Wrapped BTC tokens are available on many blockchains. If we want to take a look at the projects using Wrapped BTC;
- First, we visit the CoinMarketCap platform.
- Then we look for Wrapped BTC and when we click on the "More" option that I show with the box, we can see the platforms that use wBTC.
- Although not visible in the screenshot above, many platforms such as Binance Smart Chain, Tron blockchain are among the platforms that use wBTC.
In this section, I will talk about wBTC in Binance Smart Chain and Tron networks that we use the most.
Tron Blockchain
The Tron Foundation has created wBTC and wETH tokens by collaborating with BitGo, the world's famous financial services firm. The created wBTCs feature TRC20 tokens, and BTC users are thus unique to the Tron network; trading, saving, staking, lending, etc. They can easily benefit from DeFi services.
The Wrapped BTCs generated are the same as the original BTC price. We can see this in detail on the CoinMarketCap platform.
As you can see in the screenshot, the difference between them is a small amount. As a result, this difference is not actually reflected to us, as we can exchange our BTCs, the Bitcoin TRC20 token, in both directions at any time.
Binance Smart Chain
One of the platforms using wBTC is the Binance Smart Chain platform. Binance announced that it will produce Wrapped tokens with its project Binance Bridge. The aim of this project is to be able to interact with other blockchain networks just like other Wrapped projects. These Wrapped tokens created by the Binance platform feature BEP20 and are known as the Binance-Peg (BTCB) token.
You can also access the necessary information on the BscScan platform.
Also, as you can see in Ekren's picture, the difference between them is a small amount. As a result, this difference is not actually reflected to us, as we can exchange our BTCs and BTCB tokens in both directions at any time.*
Question 2
What is the difference between WETH of Ethereum platform and WETH of TRON platform? Explain.
Although the eThereum platform and the Tron platform ini and wETH tokens seem to be the same, their usage areas are basically different.
Ethereum wETH
The reason why the Ethereum platform produces wETH; It is because Ethereum was produced before ERC20 tokens and therefore they are not compatible with each other. Later, ETH had a very large DeFi ecosystem and ETH holders could not benefit from them. For this reason, the wETH token has emerged to meet the needs of users who want to convert their ETH to ERC20 tokens. The purpose of wETH; Among the many different platforms in the Ethereum ecosystem, it aims to enable users with ETH to perform their transactions more comfortably and easily.
Another important difference is that since the Ethereum platform itself creates wETH, the control of the tokens also belongs to the Ethereum platform. Again for the same reason; wETHs can be exchanged on the platform more easily because they are on the same blockchain network. For the same reason, there is no need to burn wETHs, because wETH acts as a representation of the amount of ETH you own and you can exchange between ETH and wETH at any time.
Tron (wETH)
wETH on the Tron network is different from wETH on the Ethereum network in many ways. The most important of these differences is that Tron wETH runs on a different network, because Tron wETH is on the Tron network and is traded as a TRC20 token. Another difference of Tron wETH is that wETHs are produced by a brokerage company (BitGo). The purpose of producing the Tron wETH token; To ensure that ETH users benefit from the services in the Tron ecosystem.
Unlike Ethereum wETH, Tron wETH is burned. Because it is a token produced as a representation of the amount of ETH you have on a different platform and you can use it until you get your ETH back. However, when you want to get your ETH back, the wETHs you have are burned. The reason for this is generally price balancing and security.
Question 3
Invest at least $5 in the Wrapped token. Explain the process with screenshots. You can use the JustSwap platform.
In this section, I will perform the process of receiving wBTC with TRX. For this, I go to the Justswap platform and connect my Tronlink wallet to the platform. Then I click on the Swap section and the swap screen appears.
- As you can see in the screenshot above, I have linked my Tronlink wallet to the platform. Then I clicked on the Swap section. As you can see later, I have a balance of 90 TRX. I will receive wBTC with 70 TRX of this balance.
- Later, after giving the necessary approvals, I exchange 0.000152 wBTC for 70 TRX.
Then I review my transaction on the TronScan platform.
- Likewise, when I look at my Tronlink wallet, I can see my wBTC amount.
Question 4
Explain in detail the Wrapped token of TRON Blockchain. Show screenshot.
The Tron platform is a constantly evolving platform and is quite popular. One of the nice projects he has done is Wrapped Tokens. We may have talked about wBTC and wETH on the Tron platform, but the Wrapped tokens of the Tron platform are not limited to ETH and BTC. We can easily see these by visiting the TronScan page and looking at the coin lists.
- Some of these coins are visible in the screenshot above. However, if we talk about it, the Wrapped tokens on the Tron platform are; There are tokens such as wBTC, wETH, wBTT, wTRX.
Now let's examine these coins in more detail.
wBTC
wBTC is a token produced by the partnership of Tron and BitGo. It has been produced for BTC investors to benefit from the innovations and features of the Tron ecosystem. It features TRC20 tokens. Its price is proportional to BTC and if you trade it, you will not incur any loss as an asset.
wETH
Likewise, it has been produced for ETH investors to benefit from the innovations and features of the Tron ecosystem and has the feature of TRC20 tokens like wBTC. Its price is proportional to ETH and if you trade it, you will not incur any loss as an asset.
wBTT
The BTT token is actually a TRC10 token, so we can say it is a token of the tron network. However, since it does not support many smart contracts, the wBTT token was produced with the aim of increasing its use in the Tron ecosystem. This token is a self-issued token by the Tron platform and therefore has a decentralized structure.
wTRX
The TRX token is a symbol of the Tron network. However, just like the BTT coin, it is a TRC10 category coin. This meant that there were problems at many points in the ecosystem. For this reason, a wTRX token featuring the TRC20 token was produced. In this way, it has taken a more useful shape. This token is a self-issued token by the Tron platform and therefore has a decentralized structure.
All of the Wrapped tokens we mentioned above are tokens of their original tokens and therefore have the same value as their original tokens. In general, they are all produced for the same purpose and it is intended to give this feature to tokens that do not have the TRC20 feature. In this way, it was ensured that they could easily benefit from all the features of the Tron ecosystem. These tokens can be divided into two groups in terms of their structure. These; We can also classify them as produced by BitGo (wBTC, wETH, Centralized) and produced by Tron Platform (wBTT, wTRX, Decentralized).
Question 5
What is wrapped token printing? What is burning a wrapped token? What is your function? Create an example that explains the process.
Different platforms work with different blockchains and there is generally no interaction. For this reason, in order to establish an interaction, platforms generate tokens that we call Wrapped on their platforms as a token of the token on another blockchain. As we know, they can sometimes do this with a third organization and sometimes they can do it themselves. They can also issue Wrapped tokens of their own tokens when they feel that the features of their ecosystem are not being fully utilized despite having their own tokens on their platform. E.g; We can say that the Ethereum platform produces wETH tokens or the Tron platform produces wTRX.
The basic logic of printing Wrapped coins works like this:
E.g; We want to use BTC on the Tron network, but such a thing is not possible. For this reason, we deposit and entrust our BTCs to the intermediary platform (BitGo). Then the BitGo platform gives us our wBTC tokens with TRC20 feature that we can use on the Tron network. At this point, if we have given 1 BTC, we get 1 wBTC in return. Because as we said before, Wrapped tokens are a representation of their original tokens.
Burning wrapped tokens works the opposite of printing. If we continue with the example we have given;
We don't want to use the Tron platform anymore or we have to leave the platform for some other reason. We are sending our wBTC tokens back to the BitGo platform. Then the BitGo platform returns the BTCs you have given before to you. Then, the wBTCs that you have delivered to the BitGo platform are burned by the platform. At this point, we can say that the BitGo platform is a kind of depository to our existence or provides its security.
Burning the Wrapped tokens produced by the intermediary platforms, as in our example, is of great importance. In this way, the stabilization of the price and the security of the system are ensured.
Conclusion
Although blockchain technology is the technology of the future, it is a new technology for now. Therefore, many shortcomings are seen and corrected or a solution is found. One of these shortcomings was the interaction problem that emerged due to the fact that many platforms were built on different blockchains. We explained how this problem was solved and why we saw it as a problem in this post. Thanks to the Wrapped tokens, many traders are more comfortable and valuing their assets in a wider range.
This subject was not a subject that I had a lot of ideas about, but I think I got the necessary information thanks to this course and I tried to explain this information to you in a plain language as much as I could. I would like to thank professor @pelon53 and everyone who read my post for this nice and fun lesson.
I wish you all a healthy and beautiful day.
CC: @pelon53
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