INTRODUCTION
Greetings friends and everyone in cryptoacademy,it's indeed a great week with an amazing topic. This week professor @polen53 took us on a journey about wrapped token and it's function in the cryptocurrency blockchain and having gone through the lessons,I will like to answer the homework questions based on my what I learnt from the lesson.
QUESTION NO 1
Name at least 2 Blockchains that use the Wrapped BTC, excluding Ethereum, and show screenshots. Explain.
Two blockchains that uses wrapped tokens are;
• Tron blockchain
• Binance Smart Chain (BSC)
TRON Blockchain
The Tron blockchain is one of the blockchains that uses wrapped tokens which stimulatws real token that can function in another blockchain.
In the case of TRON, the same company that created the WBTC on the Ethereum blockchain, created the wrapped tokens within the TRON network, with the intention of using those cryptocurrencies that are not supported by the network within TRON. The TRON blockchain works with TRC-20 tokens, which are similar to ERC-20 tokens, they are even compatible.
If we use exchange wallet such as Tronlink or Just swap and open TRON,we will observe the different wrapped tokens that exists within the Tron network amongst which we will find the WBTC,WETH etc. Tron is the second Blockchain BitGo has used so far for minting tokens like WBTC so in order to operate BTC on the Tron blockchain,it has to be minted to WBTC.
Binance Smart Chain (BSC)
Binance smart chain is another blockchain that use wrapped Bitcoin. It uses what is called Binance bridge to convert the Bitcoin into native token. The unique thing about this blockchain is that the Binance bridge supports both ERC-20 standard and TRC-20 standard and BEP-20 is the standard token.
Although the period or time of conversion on this platform is short but the processing is totally dependent on the blockchain from which the conbersion is being carried out. Binance bridge is made open to any address so it's not necessary for people to register for an account before they can use it but for users who already has an active and verified Binance account,the wrapped Bitcoin can be easily deposited and withdrawn from their account using their BEP-2 or BEP-20 asset.
It is also important to note that in Binance bridge, Binance smartchain token can be converted to the blockchain native token and also it can be easily converted back to Binance smart chain token using what is called "peg in" and "peg out".
Further information about the blockchain
Currently,the price of Binance Pegged BTCB is $57,629.85 and the Market capitalization is $6,483,415,240.81. It has a total supply of 112,501BTCB. The holders are 159,171 and the supply is 9,706,321.
QUESTION NO 2
What is the difference between the wETH of the Ethereum platform and the wETH of the TRON platform? Explain.
The TRC-20 and the ERC-20 might appear to be similar because are compatible but the truth is that although they have a few similarities,they still has their differences and I will like to talk about the differences that exist between them.
| ETH wETH | TRON wETH |
|---|---|
| • Ethereum wETH is built on the Ethereum blockchain in order to be able to exchange ETH and ERC-20 since they belong to the same ecosystem. | The Tron wETH here is not built on Ethereum blockchain but rather it is coined by the BitGo company to enable transaction in the Ethereum blockchain. |
| • The Ethereum wETH is controlled by the Ethereum blockchain. | The Tron wETH is controlled by the BitGo company because they coined it. |
| --------- | ---------- |
| The Ethereum wETH functions as stable coin | The Tron wETH does not function as stable coin |
| Ethereum wETH does not burn. Its burning is not needed to maintain the price, it is only a representation of the ETH within the DeFi ecosystem of Ethereum. | The Tron wETH , burning is required. Here as the token is minted by an external company (BitGo), there must be its burning to be able to control the price of the token and the security of the transactions between the Original token and the wrapped token. |
QUESTION NO 3
Make an investment of at least $ 5 of a Wrapped token. Explain the process with screenshots. You can use the JustSwap platform
In order to answer this question, I will be using Binance exchange platform to make an investment worth $5.
• The first thing I did was to login to my verified Binance account. Below is a screenshot of my Binance verified account.
My Verified Binance account/Screenshot From Binance App
• When the app opened,I clicked on trade as shown on the screenshot below.
Binance App Homepage/Screenshot From Binance App
• I want to make investment on wBTC using BTC bit,so I already has BTC in my Binance wallet as shown in the screenshot below.
My BTC balance/Screenshot From Binance App
• Next thing I did was to search for WBTC/BTC on the search bar as shown in the screenshot below.
Screenshot From Binance App
• Then I exchanged 0.0001BTC at a market price of 1.0008 as shown in the screenshotbelow,then I clicked on buy WBTC as indicated in the screenshot below.
*Buying WBTC/Screenshot From Binance App"
• The order was successfully executed and the asset was successfully added to my wallet as shown in the screenshot below.
Order completed/screenshot from Binance app
I have successfully made made an investment with wrapped token
QUESTION NO 4
Explain in detail the Wrapped token of the TRON Blockchain. Show screenshot.
The Tron blockchain is one of the blockchains that have gained popularity in the cryptocurrency space and it so far it has developed wrapped token into it's DeFi ecosystem in other to grow more and attract more users in the blockchain.
Talking about wrapped tokens in the Tron ecosystem, there are currently four(4) wrapped tokens that can be gotten both in Dex JustSwap and in TRONSCAN block explorer respectively and these wrapped tokens are;
• WBTT
• WTRX
• WBTC
• WETH
This four wrapped tokens are grouped into two (2) groups according to their functions and characteristics.
TRON Wrapped Tokens:
This comprises of the WTRX and WBTT. The Tron blockchain has a wrapped token called wrapped TRX and it's symbol is WTRX and this token is TRC-20 which means it is TRC-20 supportd token. Also,the BTT despite being compatible with the Tron network because it is a TRC-10 token, TRC-20 tokens are needed to apply certain smart contracts in the Tron network and to be able to implement tokens in its virtual machine, then the WBTT was created .
Something important is that TRON is also working to implement a WLTC very soon to its network.
Here we have the information of the tokens:
WBTT
WTRX
Also,the current price of WTRX according to nomics.com is $0.097621 as seen in the screenshot below, with a total supply of 17,622,010,076.888446WTRX. The contract address for Wrapped TRX's smart contract is: TNUC9Qb1rRpS5CbWLmNMxXBjyFoydXjWFR
Wrapped Tokens introduced by BitGo
This group comprises of WBTC and WETH and these are the first set of wrapped tokens that were interested into the network BitGo company.
This particular wrapped tokens are minted,burned and controlled by BitGo company who is in charge of the. This tokens have equal value with their core cryptocurrencies that is to say that 1 WETH equals 1 ETH,and 1wBTC equals 1BTC.
These tokens are TRC-20 tokens which is why they are able to work in other platforms of the Tron network.
Here we have the detailed information of each one:
WBTC
WETH
Aside from the above listed wrapped tokens of tron, there are also other wrapped tokens in Tron blockchain. Some of them are shown in the screenshot below.
QUESTION NO 5
What is to mint a Wrapped token? What is burning a Wrapped token? What is your function? Create an example explaining the process.
Minting wrapped token
Minting a wrapped token simply means creating a new wrapped token of that same token. Simply say it's a process if creating new wrapped token.
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source
For a wrapped token to be minted,the first person that initiate the process is the merchant after which the custodian will carry out the action. The merchant add those who recieves the wrapped token and takes the responsibility of distributing it to isers. While the custodians those who has the power of generating keys used in minting and they are also in charge of all the asset.
To illustrate the above statement;
A merchant wants to mint 50BTC, the process to follow by the merchant will be this;
• The merchant will first initiate the minting process.
• The Merchant sends the bitcoin to the custodian.
• The Custodian mint wBTC with the help of the special key in his custody and send it as contract.
• Then merchant receive the wBTC token.
Burning of wrapped tokens
Burning of wrapped tokens is the process of converting the minted wBTC back to BTC. The only address that is permitted to do this is the merchant address and the stated amount to be converted back to BTC is deducted from the wBTC of the merchant.
To illustrate the above statement*
A merchant needs 50BTC out of his wBTC, he will start to burn wBTC and the custodian will confirm the burning and then the amount of the burned wBTC will be deducted from his wBTC.
CONCLUSION
This is a very amazing topic I must say because this is my first time if learning about wrapped tokens.
The important role played by wrapped tokens cannot be overemphasized because without the help of wrapped token,exchange between other networks and blockchain wouldn't be possible.
Also,it's is of great importance to know that new wrapped tokens can be created through a process called the minting and also the minted tokens can be converted back to the original token through a process called burning and this last point is one thing that stood out for me in this topic.
I must not fail to appreciate the professor @polen53 for such an amazing lectures this week.
Thanks.
@polen53.