Wrapped Token
token · interoperability
A tokenized representation of an asset on another chain, typically intended to be backed and redeemable 1:1.
A wrapped token represents an asset outside its native environment. Usually the original asset is locked with a custodian or bridge, and a corresponding token is minted on the destination chain.
Wrapped tokens inherit risks from the backing arrangement, bridge contracts, custodians, redemption process, and proof of reserves. A 1:1 peg depends on users believing redemption will work.
Related terms
Token
→A transferable or accountable unit defined by a blockchain protocol, smart contract, or application ledger.
blockchain · asset
Bridge
→Infrastructure that enables moving assets or messages across blockchains.
technology · defi
Smart Contract
→Blockchain-enforced program or script logic that controls how assets or state may change.
blockchain · scripting