Wrapped Ether

WETH is a 1:1 representation of ETH and is used to interact with decentralized applications that require ERC-20 tokens. The key mechanics include:

• Wrapping ETH: Users can wrap ETH by sending their Ether to a smart contract, which locks the ETH and mints an equivalent amount of WETH. On Matcha, simply trade WETH for ETH.
• Unwrapping WETH: The process can be reversed to unwrap WETH by sending WETH back to the smart contract, which burns the WETH and releases the locked ETH back to the user. On Matcha, simply trade ETH for WETH.

WETH Use Cases:

• Trading on DEXs: WETH is often used in liquidity pools and to trade on decentralized exchanges such as Uniswap, where ERC-20 compatibility is required.
• Collateral in DeFi protocols: It is widely accepted as collateral in lending protocols since it is easily converted to native ETH.
• Smart contract interaction: Many DeFi applications support WETH instead of ETH because it follows the ERC-20 standard and doesn’t need additional work to integrate.

Since WETH is always backed 1:1 by ETH, there is no inherent inflation or deflation of the supply. The total supply of WETH depends on how much ETH is wrapped at any given time.

While WETH was first developed for the Ethereum blockchain, versions of Wrapped Ether are also found on other blockchains and layer-2 scaling solutions, making it interoperable across networks. Some of the networks where WETH exists include:

• Ethereum (native chain)
• Arbitrum (Layer-2)
• Base (Layer-2)
• Optimism (Layer-2)
• Binance Smart Chain (BSC) (bridged version)
• Polygon (bridged version)
• Avalanche (bridged version)
• Scroll (Layer-2 zkEVM)

WETH can be transferred between Ethereum and other compatible chains via bridges or using a cross-chain swap on Matcha. Bridged versions of WETH may not have the ability to unwrap for WETH on the network they have been bridged to, but can be traded for ETH on a native network using a cross-chain swap.

WETH is not the result of a single project or team but rather a community-driven standard for making ETH compatible with ERC-20 tokens. The standard was first introduced and developed by Matcha’s parent company 0x and other developers including MakerDAO and Gnosis, as a way to ensure ETH was compatible with the growing number of ERC-20-based dApps. The WETH standard has since been widely adopted and maintained by the Ethereum and DeFi community.

WETH is a wrapped token that acts as a utility token within the DeFi ecosystem. Its primary function is to provide liquidity and interoperability for ETH in ERC-20 compatible applications. The wrapping process is a prime example of tokenization, where a non-ERC-20 asset (ETH) is transformed into an ERC-20 token (WETH), allowing for broader usage in Ethereum-based applications.

WETH was created in 2017, as decentralized exchanges began to grow more prominent. It was developed organically through several iterations by the Ethereum and DeFi communities as a response to many competing standards, as documented in Canonical WETH. There was no airdrop or phased campaign for WETH since it is traded directly for ETH.