Wrapped Tokens Explained: What They Are, Why They Matter, and How They Connect Blockchains

When you hear wrapped tokens, digital assets that represent another cryptocurrency on a different blockchain. Also known as synthetic tokens, they let you use Bitcoin on Ethereum, Ethereum on Solana, or any chain on any other chain—without moving the original asset. Think of them like a library book checkout: you don’t take the real book home, you get a ticket that lets you borrow it. Wrapped tokens are those tickets—backed 1:1 by the real coin locked in a vault somewhere.

Most wrapped tokens are built as ERC-20, a standard for tokens on the Ethereum network, which makes them easy to trade on DeFi apps like Uniswap or Aave. The most common one is wrapped ETH, a version of Ethereum that works as an ERC-20 token on Ethereum itself. Why? Because native ETH can’t be used directly in many smart contracts. Wrapped ETH fixes that. Same goes for wrapped Bitcoin, a token that represents Bitcoin on Ethereum, allowing Bitcoin holders to earn interest or trade in DeFi. Without wrapped tokens, Bitcoin users would be stuck outside the $100B+ DeFi ecosystem.

But wrapped tokens aren’t magic. They rely on custodians or smart contracts to lock the original asset and issue the wrapped version. If the custodian gets hacked or the code has a flaw, you lose everything. That’s why some wrapped tokens are backed by centralized companies, others by decentralized multisigs. The more transparent the backing, the safer it is. You’ll see wrapped tokens pop up in posts about DeFi, cross-chain bridges, and tokenomics—because they’re the glue holding today’s fragmented blockchain world together.

Below, you’ll find real-world examples of how wrapped tokens are used, abused, and misunderstood—from DeFi strategies to scam tokens pretending to be wrapped assets. Whether you’re trying to use Bitcoin in a lending protocol or just want to know why your wallet shows WBTC instead of BTC, this collection cuts through the noise.