Wrapped Native Tokens

Native Wrapped Tokens are blockchain assets that represent a native cryptocurrency (AVAX, ALOT, ETH, etc) in a tokenized form that conforms to a specific token standard, typically ERC-20. This wrapping process involves locking the native cryptocurrency in a smart contract and minting an equivalent amount of the wrapped token.

Wrapped tokens retain the value of the underlying native asset by backing those ERC20 representations 1:1 with the native token while gaining compatibility with the ERC-20 token standard. This compatibility is crucial for interoperability within the EVM ecosystem, enabling the use of wrapped tokens in decentralized applications (dApps), decentralized exchanges (DEXs), and smart contracts that require ERC-20 tokens including the Avalanche Interchain Token Transfer dApp.

The process of wrapping and unwrapping tokens ensures that users can seamlessly switch between the native asset and its wrapped counterpart, facilitating smooth integration across various DeFi protocols and enhancing liquidity and usability within the blockchain ecosystem.

Examples of Wrapped Tokens:

• wAVAX
• wETH
• BTC.b (this is not only wrapped, but also bridged to the Avalanche Ecosystem but represented as ERC20 to gain compatibility with the Avalanche C-chain ecosystem.)