If you're familiar with the crypto ecosystem, you'll have seen the ticker for Ethereum, which is ETH. However, if you perform transactions on decentralized exchanges like Uniswap, you'll have come across the wrapped version of Ethereum called WETH.
Most times, on decentralized exchanges, you need to convert your ETH to WETH to perform certain transactions. These transactions differ as they can be carried out on blockchains other than the Ethereum blockchain. To interact with several blockchains, the wrapped Ethereum was created.
But what exactly is WETH? And what does a token being wrapped mean? This article explains WETH, how to convert WETH to ETH, and how to unwrap Ethereum.
What is WETH?
WETH is wrapped Ether, which means a token standing for the same value as Ether and one which conforms to the ERC20 token standard. Wrapped tokens are tokens that represent a particular token on another blockchain network. The value of wrapped tokens is always pegged to the original token in a ratio of 1:1.
Hence, WETH represents ETH on other networks like the Binance smart chain. Wrapped tokens were created to enhance interoperability and allow interaction between non-native blockchains or token standards.
Learning how to unwrap ethereum metamask is important in getting the original ETH token. Unwrapped WETH generates ETH, which can be transferred to a crypto exchange and used for crypto transactions. The following steps outline how to unwrap WETH.
Step-by-step Guide on How to Unwrap Ethereum
The first step in how to unwrap WETH begins with choosing a seller and rate that works for you. Learning how to unwrap weth on Metamask will guide you on using other crypto wallets like Trust Wallet. Once you've selected the amount of ETH you need, make a payment using the payment method available on the exchange.
The next step on how to unwrap ETH on metamask is as follows. Once you've made a payment, the equivalent of your funds in ETH tokens are kept in escrow. Once your payment is confirmed, your ETH tokens will be deposited into your wallet. Once you've gotten ETH, learning how to get WETH becomes fairly easy.
You can also use your credit card to purchase cryptocurrencies. Not all crypto exchanges offer this option, and for those who do, you'll be required to enter the amount and conversion rate you're satisfied with. Next is learning how to unwrap ETH, after which you can swap WETH to ETH at any time.
The following describes how to convert WETH to ETH before proceeding to withdrawals. First, use the swap tool on the exchange to convert your WETH to ETH. Aside from the transaction fee, the equivalent value will be left in your exchange wallet. You can withdraw or transfer your ETH whenever you need it.
To unwrap your WETH, simply convert it to ETH. You can also swap your WETH with other cryptocurrencies asides from ETH. Once the conversion is complete, you've successfully unwrapped your WETH. You can also learn how to get wrapped ETH as easily. The process I'd explained in detail in the next section.
How Do I Convert Ethereum to Wrapped Ethereum?
Now that you know how to unwrap ETH wrapped tokens, we're moving on to converting ETH to WETH. If you can unwrap weth, getting ETH from WETH will be simple.
The key process here is swapping or conversion. You need to trade your ETH for WETH. But before you can do that, you need to have some Ether in your crypto wallet. You can buy using peer-to-peer transactions or earn some via hosted crypto mining. As described in how to convert WETH to ETH on metamask, you'll need to connect with a decentralized exchange that runs on the Ethereum blockchain, like Uniswap.
The following highlights the process to convert your ETH to WETH, after which you can convert WETH to ETH Coinbase wallet;
- Visit app.uniswap.org -> swap
- Connect your Metamask wallet
- Select ETH for the crypto coin you want to swap and WETH for the one you want to receive.
- Input the amount of ETH you would like to wrap
- Click swap
- A popup notification will appear; this shows the estimated gas fees you need to pay for the transaction.
- Click confirm, and you'll have WETH in your wallet.
Pros of Using WETH
When you convert ETH to WETH, many opportunities are open to you that are otherwise not available with only ETH.
- WETH can work seamlessly with other ERC-20 crypto tokens. It has higher liquidity than the native token as it can only be minted by a custodian, an entity that guarantees its value (e.g., DAO, smart contract, dApp)
- WETH also enhances security as its custodians generally only use secure exchanges. Users holding WETH have more control over their cryptocurrencies as the custodian places their private keys in a secure location.
- You can convert ETH to WETH at any time using a simple process. Further, transactions involving WETH are faster, with much lower fees than native tokens.
Cons of Using WETH
Although being familiar with how to unwrap Ethereum or wrap it is great, it's also important to know the demerits of using WETH.
- You need the services of custodians to wrap or unwrap ETH. So, if the custodian has issues, you may be affected such that you won't have access to WETH. This is because the custodian may be unable to mint and burn new tokens.
- Decentralization is the main goal of crypto, but because of the necessary dependence on a custodian to mint and burn tokens, centralization comes in. Centralization can be problematic and contradictory to the decentralization of cryptocurrency. For example, there could be US$5 billion worth of WETH on the Ethereum blockchain, and it could all be controlled by one company.
- The problem of slippage is not entirely over, as minting and wrapping of ETH require the payment of gas fees. These gas fees change depending on several factors, such as network speed, and can lead to slippage.
Using DEX to Wrap and Unwrap Your ETH
DEX and CEX are acronyms for decentralized exchange and centralized exchange, respectively. An example of a CEX is Binance, which means Binance has central authority over the platform and users' funds. An example of a DEX is Uniswap, it signifies that users have the ultimate control over their crypto assets.
Dexes operate via codes and smart contracts. They're driven by a simple idea; you use an in-built swapping tool whenever you buy or sell a token. The concept of how to convert wrapped eth to eth or vice versa that has been explained in this article is based on this process.
You can use Uniswap to convert weth to ETH Metamask or exchange the coin for other tradable coins. For example, if you have some BTC, you can swap them for WETH or vice versa.
Withdraw Your WETH to Your Wallet
The truth about centralized exchanges is that although you place your funds into it, once you do, you don't ultimately own it anymore. These exchanges are bound by the government's decisions and their own rules. Although exchanges like Binance and Coinbase provide a good level of convenience to make crypto transactions, you're still in danger of losing your funds.
Centralized exchanges are like banks; your money is combined with other users' money to make a large liquidity pool that keeps the exchange running. For this reason, you can trade any coin for another coin with little to no transaction fees. The funds are moved from one user to another without interacting with the blockchain. There's no point looking to know how to wrap ETH or unwrap ETH on centralized exchanges as they don't support wrapped tokens.
Aside from buying crypto coins, you can also buy NFTs, and for that, you use OpenSea. OpenSea allows users to interact with defi protocols. You'll need a non-custodial wallet like Metamask or Trustwallet to buy NFTs on OpenSea or Rarible. On the other hand, cexes are like custodial wallets where the exchange holds your private keys and not you. Moving your funds to your wallet will give you access to several defi services and ultimately control your funds.
Exchanges are custodial wallets, where the exchange and not you hold the keys to the wallet. By moving it to your wallet, which is non-custodial, only you have access to your funds and no one else. This is the safest way of holding and using crypto. In addition, you can put your knowledge of how to wrap Ethereum and unwrap Ethereum, as wrapped tokens are supported on dexes.
What is the main difference between the process of wrapping and unwrapping?
Is there any difference when you convert wrapped ETH to ETH and vice versa? The process used to convert WETH to ETH is slightly different from that used to convert ETH to WETH. When using a smart contract, the wrapping process differs from the unwrapping step.
The wrapping process involves sending your ETH to the contract and getting WETH in return. You need to call the withdraw function to get your WETH. However, sending your WETH directly to the contract will be a burning process, meaning your tokens will be burned, and you won't get your ETH back.
To unwrap Ethereum Metamask, choose the amount of WETH you want to convert and choose what you want to convert it to. The transaction is easier, faster, and cheaper, and you get your ETH in no time.