WETH, or “Wrapped Ether,” is a type of token that represents ETH in a wrapped form. WETH’s value is always equivalent to ETH, and it can be redeemed for ETH at any time through a process called “unwrapping.” WETH is used to enable certain additional functionality on dApps, like making offers or bids.
Simply speaking, WETH is a way to wrap Ether to be used for certain functionalities on dApps.
Going a level deeper, WETH operates by different transactional standards (ERC-20) than ETH, allowing it to be used where ETH can’t, for example, in auctions on dApps. Put simply, WETH transforms ETH into something of equivalent value but with more flexibility.
First, to wrap ETH and turn it into WETH, a user sends a specified amount of ETH to a decentralized smart contract that has been designed to create WETH. The smart contract holds the ETH in a reserve and mints an equal amount of WETH tokens for the user.
Next, the WETH tokens are transferred to the user. Here’s how it works: after the user sends their ETH and it’s verified by the smart contract, the smart contract transfers a corresponding amount of WETH tokens to the user's wallet. These WETH tokens can then be used for transactions on the Ethereum blockchain just like any other ERC-20 token.
And how does WETH turn back into ETH? When the user wants to convert their WETH back to ETH, they can send the WETH tokens back to the smart contract (which burns those WETH tokens) and receive an equivalent amount of ETH in return. This process is called "unwrapping" and is essentially the same process as wrapping but in reverse.
Converting ETH to WETH can be done using your wallet. You can often wrap ETH directly through your wallet provider or using a decentralized exchange. But OpenSea also provides a simple interface through the wallet icon where you can wrap ETH and unwrap WETH by interacting directly with the blockchain.
Connect your wallet: First, you'll need to connect your Ethereum wallet to OpenSea. OpenSea is compatible with a number of different wallets, including MetaMask, WalletConnect, and Coinbase Wallet.
If you don’t have enough native ETH already in your wallet, you’ll need to deposit ETH. You can do this by selecting the "Deposit" option and specifying the amount of ETH you want to deposit.
Wrap ETH: Once your ETH is in your OpenSea wallet, you can wrap it into WETH by selecting the "Wrap" option. In doing so, you will initiate a transaction directly on the blockchain in which you send your ETH to a decentralized smart contract that mints an equivalent amount of WETH for you.
Use your WETH: After your ETH has been wrapped into WETH, you can use it to make offers on OpenSea and other Ethereum dApps. You can also unwrap your WETH back into ETH at any time by selecting the "Unwrap" option and specifying the amount of WETH you want to unwrap.
Find the auction: Once you have WETH in your wallet, you can browse the available auctions on OpenSea and find the one you're interested in bidding on.
Place your bid: To place a bid in WETH, select the "Place bid" option and specify the amount of WETH you want to bid. If you don't have enough WETH in your wallet, you'll need to wrap more ETH or purchase WETH from an exchange.
Confirm the transaction: After you've placed your bid, you'll be prompted to confirm the transaction by signing it with your Ethereum wallet. This will initiate a transaction on the Ethereum blockchain, which may require paying gas fees.
Monitor the auction: After you've placed your bid, you can monitor the auction to see if you've been outbid or if you're the current high bidder. If you're outbid, you can place a higher bid by repeating the previous steps.
Complete the sale: If you're the highest bidder when the auction ends, you'll be required to pay the winning bid amount in WETH. Once the payment is confirmed, the item will be transferred to your wallet.
WETH can be used in auction-based transactions or to make offers. While ETH requires users to send their payment at the time of the transaction, WETH makes it possible to create a pre-authorized bid (or offer) on an NFT that can be completed as soon as the buyer accepts it. It also enables the user to make bids or offers on multiple NFTs using the same WETH.
WETH and other wrapped currencies became popular in response to the low interoperability of early token contracts. In the early days of Ethereum, many people were using smart contracts to create and sell fungible tokens, but there was no unifying standard by which all these new tokens had to abide. This resulted in a mess of incompatibilities and issues.
Enter ERC-20. Created in 2015, these standards implemented a set of functions every token must execute to ensure compatibility with other tokens. This also improved the security and reliability of the network because this standardization meant developers could establish best practices.ETH predates those ERC-20 standards, and it’s not ERC-20 compliant. WETH is ERC-20 compliant, and because it represents ETH at equal value, it can be used where ETH otherwise couldn’t.
WETH can potentially reduce gas fees in certain situations, depending on the use case. Gas fees are the payments needed to execute transactions on the blockchain, and when users trade a variety of tokens on the Ethereum blockchain, they often need to make multiple transactions. Each action incurs a gas fee, including wrapping ETH, but using WETH may in some cases help reduce the number of transactions required to complete a transaction which, in turn, could save them gas fees.
The value of WETH is “pegged” to the value of ETH, meaning it always matches that of ETH. Another way of saying this is that the conversion rate between WETH and ETH is always 1:1, meaning that 1 WETH is equivalent in value to 1 ETH.
Yes, there are several other wrapped tokens other than WETH. Some examples include WMATIC (wrapped Matic), WBTC (wrapped Bitcoin), WDOT (wrapped Polkadot), and WLTC (wrapped Litecoin). Not every token can be used on OpenSea. Learn More.
WETH can be used to bid in auctions for NFTs, to make offers to purchase an NFT, or for other purposes depending on the dApp.
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