What is the Difference Between ETH and WETH?
Are you new to the world of cryptocurrency and you’re wondering about what ETH and WETH are? Our short guide will explain the difference between Ethereum (ETH) and wrapped Ethereum (WETH) and more.
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What are ETH and WETH?
As you might already know, Ethereum is a blockchain that is best known for Ether (ETH), a cryptocurrency and the native token of the blockchain. Aside from ETH, the Ethereum blockchain supports a wide range of digital assets, including Non-Fungible Tokens (NFTs), and other tokens such as USDT, USDC, DAI, SHIB, SAND, and more.
ERC20 Explained - What’s Its Purpose?
Before we get any further, we have to introduce the Ethereum token standard, ERC20. ERC20 was introduced in 2015 to allow users to create and issue smart contracts in the Ethereum blockchain. These smart contracts can then be used to create tokenised assets or smart property for investment purposes.
While ETH is the native currency of the blockchain, ERC20 tokens are different as it is a standard for a type of token. The ERC20 standard can be used by anyone to make ERC20 tokens (ie. USDT, USDC, DAI, etc.).
The ERC20 has introduced a number of benefits to the blockchain – as any user can use the ERC20 standard to make an ERC20 token, it is easy for blockchain developers to create their own cryptocurrency. The ERC20 also becomes a standard protocol for the tokens on the blockchain.
Furthermore, as ERC20 tokens can be easily exchanged for another, these tokens offer high liquidity. Transactions are also risk-free through the implementation of smart contracts.
Differences Between ETH and WETH
While ETH and WETH are on the same blockchain, they are different tokens. ETH is the native token while ERC20 tokens including WETH are a standard for a number of tokens. As ETH was launched before the ERC20 token was created, it is not ERC20 compliant. By wrapping ETH, you are essentially converting ETH for use in the ERC20 standard.
In short, ETH does not follow the ERC20 standard and wrapped ETH or WETH is an ERC20 compatible version of ETH. By wrapping ETH, a person holding ETH is able to interact with other tokens on the blockchain using WETH as you can exchange an ERC20 token for another ERC20 token of equivalent value. One ETH is equivalent to one WETH in value – however, swapping from ETH to WETH may incur gas fees. Read more about gas fees on the Ethereum blockchain here.
Ethereum and ERC20 Wallets Explained
In order to use ETH or any ERC20 token, you will need to understand how Ethereum wallets work. A wallet refers to a digital wallet that stores all your tokens. A wallet allows you to hold, buy and sell digital assets on platforms where the blockchain is supported.
First, make sure that your wallet of choice supports Ethereum and ERC20 tokens. Some popular wallets for Ethereum and ERC20 include MetaMask and Coinbase Wallet. All Ethereum wallets can store ERC20.
Your wallet will have an Ethereum address which you will use to make any transactions in the blockchain. You will also be able to use these wallets to store NFTs and other digital assets, which means that one wallet can store ETH, WETH, NFTs, and more.
How to Convert ETH to WETH
First, you need a wallet and you need to purchase ETH. You can purchase ETH in a number of ways – via credit card, bank transfer, or if you own other cryptocurrencies, you can exchange them for an equivalent value in ETH. Do note that each platform will have different fees or conversion rates.
Here are a few platforms that are beginner-friendly:
Here are some recommended wallets:
Once you have ETH in your wallet, you will need to wrap your tokens. This is done by simply trading ETH for WETH. You will need to connect your wallet to a decentralised exchange (DEX) such as 1inch and Uniswap.
On your DEX of choice, there should be an option to swap/wrap ETH to WETH. Select the amount of ETH you want in WETH, then proceed with swapping/wrapping your tokens. Remember, swapping ETH for WETH will incur gas fees.
Now you will have WETH in the same amount of ETH you have wrapped (minus gas fees if applicable!). You can now use your WETH!
What Are the Popular Uses of WETH?
ETH is widely accepted across multiple platforms – so what does WETH do? WETH is used to make bid offers for NFTs on OpenSea, which is currently the largest NFT marketplace.
Additionally, looksrare.org is also a popular NFT marketplace that uses WETH. Bid offers on these platforms are made with WETH instead of ETH. So, if you’re looking to buy NFTs and you’re holding ETH, you most likely need to convert them to WETH before you’re able to make any bids.