What is Wrapped Ethereum (wETH)?

Wrapped Ethereum, also known as wETH, is a version of Ethereum (ETH) that is compatible with decentralized applications that follow the ERC20 token standard. While ETH is the native currency of the Ethereum network, it was created before the ERC20 standard existed, which means it does not naturally follow the same technical format used by most tokens today.

To make ETH usable in decentralized finance platforms, it is "wrapped" into a new token called wETH. This version mirrors the value of regular ETH and can be exchanged back to ETH at any time. Wrapping ETH simply means locking your original ETH in a smart contract, which then gives you the same amount in wETH.

wETH is useful for interacting with many DeFi protocols, such as decentralized exchanges, lending apps, and NFT marketplaces. It helps make trading and interacting with other tokens more seamless since most of these platforms require tokens to be ERC20-compatible.

Even though wETH is not ETH itself, the two are always worth the same because you can convert one to the other directly. Some platforms, like Velora, may do this for you in the background so you can just use your ETH without worrying about the technical differences.

In short, wETH is a wrapped version of Ethereum that makes it easier to use ETH in apps that require ERC20 tokens.