Wrapped Token
Last updated 17 October 2026Last verified 17 October 2026
What is a wrapped token?
A tokenized representation of an asset from another chain or context. WBTC is Bitcoin wrapped on Ethereum; wETH is ETH wrapped as an ERC-20. Adds a redemption trust assumption: the wrapped token is only as good as the custodian or bridge holding the underlying asset. WBTC's custodian change controversy (2024) illustrated how wrapper governance can become a risk in itself.
TradFi equivalentA depositary receipt, for the cross-chain kind such as WBTC. What differs is that the receipt is not a registered security, the custodian is a trust company rather than a depositary bank, and redemption is open only to whitelisted merchants rather than to any holder. wETH is not a receipt of that kind, since the ETH sits in a contract anyone can unwrap, so there is no custodian to trust, only a change of format.