Understand wrapped tokens¶
Different blockchains can't communicate with each other. For example, if you hold Bitcoin (BTC) on the Bitcoin blockchain, you can't use those funds on the Ethereum blockchain.
Wrapped tokens solve this problem. For example, you can exchange your BTC coin for WBTC, wrapped Bitcoin, which is a token on the Ethereum blockchain. Each WBTC token is backed by a BTC coin stored in a dedicated vault. To understand the differences between coins and tokens better, check out Understand coins and tokens.
Status Wallet is only compatible with Ethereum-based tokens.
- The value of your wrapped tokens depends on the value of their original coins.
- Wrapped tokens are backed 1:1 by the asset they depend on. For example, if you own 0.5 WETH, you own the equivalent ETH value.
- Wrapped tokens are similar to their original coins, but they don't have all the same features those original coins offer.
- You can use wrapped tokens for staking, swapping, governance and in DeFi apps, just as any other token on the Ethereum blockchain.
How wrapped tokens work¶
The value of your wrapped tokens depends on the value of their original coins, and each wrapped token is backed 1:1 by their original coin stored in a dedicated vault.
Wrapped tokens are similar to their original coins, but they don't have all the same features those original coins offer. For example, the XMR (Monero) coin's original blockchain guarantees your transaction history and balance are fully private, but WXMR (wrapped XMR) is a regular token on the Ethereum blockchain. That's why your transaction history for XWMR will be public, just as for any other Ethereum-based token. Status Wallet is only compatible with the Ethereum blockchain, so you need to use WXMR.
To swap or send your wrapped tokens, you need to have Ether on your Status Wallet balance to pay the network fees. Network fees are charges you pay for transactions to be processed on the blockchain. For more details on network fees, check out Understand network fees.
Where to get wrapped tokens¶
To get wrapped tokens, you can:
- Swap your ETH for any wrapped token available in Status Wallet. For more details, check out Swap crypto.
- Exchange your coins (for example, BTC) for wrapped tokens and send these to your Status Wallet.
Where to use wrapped tokens¶
You can use your Ethereum-based wrapped tokens just like any other tokens on the Ethereum blockchain. For example, you can use them for staking and governance, as well as in DeFi apps, including as loan collaterals.