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Definition: wrapped token

A tokenized representation of another cryptocurrency. A wrapped token, or wrapped cryptocurrency, enables crypto on one blockchain to be used ("wrapped") on another blockchain. For example, Bitcoin (BTC) is wrapped as wBTC in order to trade on the Ethereum network. Ethereum's own ether crypto (ETH) was created before ERC-20 became a standard, and wrapped ETH (wETH) provides compatibility with ERC-20. Holders of wBTC and wETH own BTC and ETH by proxy. A smart contract is created that holds the primary crypto and exchanges it for the wrapped version. See Ethereum token, stablecoin and cryptocurrency.