Also known as: Wrapped Ether

Definition

WETH, or Wrapped Ether, is an ERC-20 token that represents Ether (ETH) on the Ethereum blockchain. It allows ETH to be used in decentralized applications (dApps) and smart contracts that require ERC-20 tokens.

Why it matters

• WETH enables seamless integration of ETH into the Ethereum ecosystem.
• It facilitates trading and liquidity in decentralized exchanges (DEXs).
• WETH allows users to participate in DeFi protocols that require ERC-20 tokens.
• It enhances interoperability between different tokens on the Ethereum network.

Risks & Pitfalls

• The wrapping process introduces smart contract risks.
• Users may face liquidity risks when converting between ETH and zero-network-bridged-weth-zero-network" class="ilink">WETH.
• Market volatility can affect the value of WETH relative to ETH.

Examples

• A user wraps ETH to trade on a decentralized exchange that only accepts ERC-20 tokens.
• Developers utilize WETH to create liquidity pools in DeFi applications.

Related

None.