Eth vs Weth: How are they similar?

Introduction

The ETH vs WETH argument frequently confounds liquidity providers (LPs) and investors when employing Defi protocols. Since they often need to wrap their ETH tokens or purchase WETH tokens, Decentralized Finance (Defi) customers frequently fret about how they will convert WETH to ETH.

You can’t directly use ETH to bid on products while engaging with Ethereum dApps because it doesn’t follow the ERC-20 guidelines. The grease for this friction is WETH (wrapped ETH).

If you’ve dealt with Ethereum decentralized applications (dApps), like OpenSea and LooksRare, it’s possible that they asked you to buy WETH through auctions.

The distinctions between ETH vs WETH, as well as how to obtain WETH and convert it to ETH and vice versa, are covered in this guide. Almost all of the tokens you buy, sell, or invest using the Ethereum network are ERC-20 tokens.

Eth vs Weth: difference

The Ethereum blockchain‘s native coin, ETH, is required to pay gas fees. However, while engaging with Ethereum dApps, you utilize WETH, which is ETH that has been tokenized or packaged, to make purchases. Despite having a 1:1 ratio in common, they are different in several ways.

The main difference between WETH and ETH is that WETH adheres to the ERC-20 token standards, whereas ETH does not. Many blockchain projects began producing native tokens with specific functionalities in the early days of the cryptocurrency industry.

The ERC-20 token standard was first applied in 2015 to provide guidelines for Ethereum tokens and enable interoperability between blockchains. For each token contract, the bar, for example, clearly defines the terms total supply, Transfer, approve, allowance, etc.

Can ETH utilize for Ethereum dApps?

ETH was created before the adoption of the ERC-20 token standard. Because of this, ETH in its original form does not adhere to the ERC-20 standards, which restricts its application.

Developers and customers must seamlessly use various products and services on numerous blockchains for Defi to succeed, much like how you move money from one local bank to another local bank.

 Although the traditional financial system makes this interoperability appear simple, the walled nature of most networks becomes complicated for blockchain players. In DeFi’s current condition, most dApps provide trading and investment opportunities using ERC-20 tokens. For instance, you need to convert ETH to WETH if you wish to lock it in a platform of Uniswap liquidity pool or use as a pledge on the platform Maker protocol.

It’s important to note that this does not imply that you must hold WETH to use all Defi Apps. However, most Ethereum dApps like Uniswap demand that you have WETH.

Is WETH priced the same as ETH?

Yes, WETH will always be priced the same as ETH. The 1:1 wrapping ratio is the key to preserving WETH’s peg with ETH. In other words, the custodian mints a whole WETH when you wrap 1 ETH and burns your ETH. The opposite is also accurate. Think about these two examples:

• Investors will buy WETH while it is less expensive than ETH, unwrap it into the more expensive ETH, and profit handsomely. A situation like this would raise the price of WETH and the demand for cryptocurrency.

• In contrast, if ETH is cheaper than WETH, traders will buy ETH and convert it to WETH to profit, increasing WETH’s supply and bringing down its price.

These fundamental laws of supply and demand generally guarantee that the WETH/ETH peg stays constant throughout.

Why is it unable to utilize ETH directly for Ethereum dApps?

ETH was created before the adoption of the ERC-20 token standard. Because of this, ETH in its original form does not adhere to the ERC-20 standards, which restricts its application.

Developers and customers must seamlessly use various products and services on numerous blockchains for Defi to succeed, much like how you move money from one local bank to another local bank. Although the traditional financial system makes this interoperability appear simple, the walled nature of most networks becomes complicated for blockchain players. Token wrapping now offers the ideal remedy.

In DeFi’s current condition, most dApps provide trading and investment opportunities using ERC-20 tokens. For instance, you need to convert ETH to WETH if you wish to lock it in a Uniswap liquidity pool or use it as collateral on the Maker protocol.

It’s important to note that this does not imply that you must hold WETH to use all Defi Apps. Consider AAVE, where you can deposit ETH, and the AAVE protocol will automatically wrap it so you can use their products and services in the background. However, most Ethereum dApps like Uniswap demand that you have WETH.

How to wrap ETH

A wrapped ETH is produced through a smart contract that receives the ETH. Since ETH reserves back WETH, a smart contract locks the ETH into a secure address, yet you can trade it whenever you want. Therefore, the wrapped token (WETH) gets burned when the smart contract sends the native token to your wallet. Every time, the swap ratio is 1:1. Please be aware that wrapping ETH will result in transaction or gas costs.

Alternately, using a decentralized exchange to convert another token into WETH might be easier (DEX). Additionally, you can exchange another ticket for WETH straight from your MetaMask wallet. ETH may be wrapped and unwrapped entirely with the help of UniSwap, OpenSea, and MetaMask.

To wrap ETHER listed below

1. Ensure you have an account with MetaMask. Register with your wallet.
2. You may view the amount of ETH currently in your wallet. Users can able tu use their credit or debit card to purchase some ETH if you don’t have enough money.
3. Connect your MetaMask wallet to a decentralized exchange, such as Uniswap, by going there.
4. Before hitting Swap, you must be connected to the Ethereum leading network.
5. A new popup with token alternatives will appear on your screen. From the drop-down menu in the Swap to box, select WETH.
6. Enter the desired amount of ETH, then click Review Swap. A new prompt with the specifics of the completed transaction will then be presented to you.
7. Check the transaction, gas costs, and the 1:1 conversion rate information. You will be prompted to add extra funds if you don’t have enough available to complete the transaction.
8. Click Swap to finish the transaction now.

How to Open Weth

Ether can be unwrapped in a variety of ways:

1. Smart contract manual interaction
2. Utilize Uniswap or Binance to convert ETH into WET H.
3. On OpenSea, employ MetaMask.

For unwrapping our ETH, we’ll go with option three. Following are some prerequisites to consider:

1. A MetaMask account as well as an OpenSea account. On MetaMask and OpenSea, registering is free.
2. Money in your MetaMask wallet is sufficient. Your credit or debit card can add money to your wallet.
3. Connect your MetaMask and OpenSea accounts once your wallet has been funded. You must consent to the connection.

Conclusion

To conclude with the Eth vs Weth, WETH is an ETH token that may be used on any blockchain or decentralized application that accepts ERC-20 tokens. Gas fees must be paid using ETH, although it does not have the functionality of an ERC-20 pass. May this above information about Eth vs Weth helps you to get all doubts clear.