Token wrapping is the process of creating a new token that represents, or is pegged to, another underlying asset, often on a different blockchain or using a different token standard. The wrapped token is usually backed 1:1 by the original asset held in a smart contract or with a custodian.
Wrapping makes it possible to use an asset in environments where it is not natively supported. Examples include Wrapped Ether (WETH), which represents ETH as an ERC-20 token for use in DeFi protocols, and Wrapped Bitcoin (WBTC), which represents BTC on Ethereum. Wrapping improves interoperability while preserving exposure to the underlying asset.
