Hello Fellow steemians this is my assignment post for professor @pelon53
Name at least 2 Blockchains that use the Wrapped BTC, excluding Ethereum, and show screenshots. Explain.
A wrapped token is a tokenized representation of another coin with the same value on a different blockchain, and just like the name implies wrapped token is more or less the same asset only wrapped in another’s coat to allow it to be useable in the blockchain where the wrapped coat can be used.
A wrapped token still retains its value even in another Blockchain and can be unwrapped at any point I.e be returned to its original blockchain at the owners leisure. The wrapped tokens are often created for multiple purposes and some of which can be
⁃ Scalability
⁃ Low transaction fees
⁃ Cross chain operability
For the sake of this course I will be explaining the
⁃ BINANCE
⁃ TRON
⁃ BINANCE
The Binance blockchain have an edge on wrapped tokens, with the help of the Binance Bridge which enables interoperability of other assets in the Binance blockchain, assets like Etherum and Bitcoin can be wrapped on the blockchain like ERC-20 and used.
The Binance bridge project performs a process termed as peg-in and peg out, peg-in is seen when a foreign asset lets say u want to use your Bitcoin on Binance blockchain chain the Binance project performs a peg-in process which is wrapping the Bitcoin and converting it into a BTCB-BEP-20 token which is a standard that is used in the Binance blockchain. The Same procedure for the peg-out but it involves unwrapping the wrapped token instead of wrapping.
The Binance bridge converts an assets equivalent to a BEP-20 token which is accustomed to the blockchain, for instance if one wants to spend 1 BTC in the Binance blockchain he sends it to the Binance bridge project who then mints it and converts it to a BTCB token with an equal equivalence of 1BTCB
⁃ TRON
The TRON blockchain known for its vast application and low transactions fee offers, the Tron blockchains TRC-20. The company responsible for the creation of the WETH were also responsible for the creation of the WTRX. For how expendable the tron token is it has a vast range of applications and that reason the wrapped token was created so the use of the token wouldn’t be limited to just the TRON blockchain.
QUESTION 2
What is the difference between the WETH of the ethereum platform and the WETH of the tron platform
⁃ 1
The Native token of the Ethereum blockchain is the ETH token which is used across the etherum blockchain, now the ETH token was not compatible with other Dapps and tokens built across the etheruem blockchain ecosystem which does not feature the ETH token which eventually led to the creation of the ERC-20
The ETH token was not compatible with the ERC-20 standard partly cause it was a standard created after the native token and was created to set a standard for new tokens being created at the time.
This led to the creation of the Wrapped token on the Ethereum hence the name WETH and this is done by trading your ETH via smart contract in exchange for WETH of equal value as of your ETH and Trading it back via smart contract to convert it back to ETH from WETH
While
The WETH of tron platform is simply WRAPPED ETH that was minted by a company called bitgo with a value equivalent to the actual ETH but in this case the WETH is TRC-20 compatible so it allows Tron Ecosystem Dapps and Tokens to work with it.
⁃ 2
The both of them operate on different blockchain hence their scalability and gas fee is different
⁃ 3
The Ethereum based WETH was created to suit the ERC-20 Dapps and tokens while the other was created to Facilitate TRC-20 Dapps and tokens
3.- Make an investment of at least $ 5 of a Wrapped token. Explain the process with screenshots. You can use the JustSwap platform.
For the purpose of this assignment, I will be making use of the TronLink iOS app to perform the task from tron to WBTC
The first step would be to go on the TronLink home and click on the Swap button as indicated in the image
Then I selected the amount of Tron I wanted to convert which was 53 and selected the Wrapped token WBTT I wanted to swap it to which was equivalent to 1438 WBTT
After I clicked on the swap button the transaction processed and confirmed in less than a minute
Explain in detail the Wrapped token of the TRON Blockchain. Show screenshot.
Wrapped token on the tron block is the representation of other blockchain tokens as a TRC-20 token which will enable other Assets like Bitcoin, Ethereum e.t.c to be used on the tron blockchain.
Bitgo a crypto custodian company began minting wrapped tokens September 2020 in collaboration with tron blockchain, users with Bitcoin desiring to use in the tron blockchain for various reasons like purchase, transactions, scalability or low fees get to do so by contacting the Bitgo company who in turn mints the exact value of the asset and returns to the user as a wrapped token which can be used on the blockchain for various transactions. Wrapped token on the tron blockchain includes
- WRAPPED ETHEREUM (WETH)
- WRAPPED BTT (WBTT)
- WRAPPED BITCOIN (WBTC)
- WRAPPED TRON (WTRX)
A wrapped token on the tron blockchain platform has its value pegged to the original assets value for instance if one Bitcoin is minted on the tron blockchain it’s value would still be equivalent to the actual 1 Bitcoin only it would be useable on the tron blockchain this time. Users use the tron wrapped token for various benefits such as
- LOW TRANSACTIONS FEE
- TRADING ON DEX
- SCALABILITY
- VAST APPLICATION TO THE TRON ECOSYSTEM
- CONFORMS TO TRC-20 TOKEN STANDARD
QUESTION 5
What is to mint a wrapped token? What is burning a wrapped token? What is their function? Create an example and explain the process.
What is to mint a wrapped token?
Minting is process performed by custodians which involves receiving an original asset and wrapping it with the same value so it can be useable in the foreign blockchain. For instance one sends 1 Ethereum to a custodian which gets converted to a WETH with the same value as the initial asset only in this case it can be used on a different blockchain, the process of converting this token to a wrapped token is termed as MINTING
What is burning a wrapped token?
Burning a wrapped token is the reverse scenario of minting an asset, here it involves sending a wrapped token to a custodian to receive the original asset with equal value. How this works is for instance one is done with his initial use for a minted or wrapped token on a foreign blockchain and wishes to convert it back to its original form so it can be use in its original blockchain he will send the wrapped token to a custodian who then converts it from a wrapped token to an unwrapped token with its original form and equal value as sent for burning
What is their function?
Both minting and burning of an asset play individual roles in the blockchain I.e
Minting allows useabilility of a token on a foreign blockchain and this is possible because of the wrapping that is done by custodians, minting an asset doesn’t just make an asset useable it also makes it increases the blockchain where it being to liquidity, as more transactions occur in a blockchain so does the liquidity and the more wrapped token transactions there is the more liquidity the blockchain has. Burning a token returns the leftover amount back to the blockchain and this helps maintain the security of the blockchain receiving its asset back
Create an example and explain the process.
Now let’s assume Bob wants to make a 50$ transaction on the Ethereum platform to purchase a digital asset and the seller on the platform only uses ERC-20 standard tokens. Bob would have to contact a custodian and get his 50$ worth of Ethereum converted to WETH with the help of smart contract via a process called Minting which is a ECR-20 compliant token.
Now let’s say for some reason the sellers price has dropped to 45$ and bob has already converted his 50$ worth of WETH after the transaction Bob sends his remaining 5$ worth of WETH to a custodian who converts it back to ETH with the help of smart via a process called Burning.
Graphical explanation is given below
CONCLUSION
Wrapped token helps extend the usability of an asset to another blockchain without having to convert the asset from one form to another and this opens up a window of opportunity between blockchains.
cc : @pelon53