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What is a wrapped token?
A wrapped token is a token that stands for another asset one-for-one, so it can be used where the original cannot. Wrapped ether (WETH), for example, is ETH deposited into a contract that issues the same amount of an ERC-20 token, which can be swapped back for ETH.
What it means for you
A wrapped token is worth the original only while it can be swapped back, so you carry the risk of whatever holds the backing. Different versions exist on different chains with different security properties, and copies can share a name, so check the contract address before you send or swap.
A common mistake: “WETH is the same token on every chain.”
In fact: ethereum.org notes that besides the canonical WETH contract there are other variants on other chains, with different security properties. Each is a different contract backed differently; check which one you hold.
How it works
Wrapping deposits an asset with a contract, a custodian or a cross-chain bridge, which issues the same number of wrapped tokens; unwrapping sends them back to be burned and releases the original one-for-one. For WETH the holder is one contract on Ethereum, and wrapping or unwrapping costs gas. When the original lives on another chain, a custodian or bridge holds it, and the wrapped token is worth the original only while that holder can and does redeem. The US SEC's March 2026 interpretation describes such a token as a receipt for the deposited asset.
Sources: ethereum.org: What is wrapped ether (WETH), SEC: Application of the Federal Securities Laws to Certain Types of Crypto Assets (Mar. 17, 2026) · checked 4 October 2026
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