Wrapped Token
A token that represents another asset one-to-one on a different chain, letting it move where it natively cannot.
A wrapped token is an IOU backed by a real asset held in reserve. Wrapped Bitcoin (WBTC) is the common example: lock one BTC with a custodian and you receive one WBTC on Ethereum, usable in DeFi where native Bitcoin cannot go. Burn the WBTC and you redeem the underlying BTC.
Wrapping unlocks composability across chains, but it adds a layer of trust. Something has to hold the underlying asset and honor redemptions — sometimes a centralized custodian, sometimes a bridge contract. That backing is a target. Cross-chain bridges have been hacked for billions, and if the reserve fails, the wrapped token can depeg from the asset it is meant to mirror.
Related terms
A protocol that moves tokens or data between two separate blockchains that cannot otherwise talk to each other.
Cross-ChainDescribes activity that spans two or more separate blockchains, such as moving assets or messages between them.
DepegWhen an asset meant to track a fixed value, like a stablecoin's $1, slips away and won't snap back.
DeFi (Decentralized Finance)Financial services run by code on public blockchains, letting people trade or borrow without a bank.