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WRAP


Wrapped Asset

An abbreviation for wrapped asset; a type of digital asset (digital token) and cryptoasset (cryptocurrency or cryptocurrency token) that is digitally configured to represent an underlying asset on a blockchain other than the original one and hence is not the original asset, but rather a wrapped version). Wrapping an asset allows it to be used on a blockchain that it wouldn’t otherwise be compatible with. Furthermore, wrapping an asset can be used to represent a wide array of asset types, including cryptocurrencies, commodities, real estate, or even traditional financial instruments (such as bonds and stocks).

For example, a wrapped cryptocurrency is a type of cryptocurrency representing another existing crypto (cryptoasset), but on a different blockchain or network. It is a crypto coin that is pegged to the value of another original, real or traditional assets such as gold, stocks, and real estate, or even another cryptocurrency (or crypto). The cryptocurrency is deployed on the decentralized finance (DeFi) platforms. The original asset is ‘wrapped’ into a digital vault, and a newly minted asset is created to transact on other platforms.

Wrapped asset can virtually be linked to any asset or asset class, not necessarily a cryptocurrency or other types of cryptoassets and can operate on a different blockchain network. This includes real estate, commodities, or even fiat currencies. A wrapped bitcoin, or WBTC, for example, derives its value from bitcoin (BTC) price behavior but may be used on other networks, e.g., the Ethereum network. Wrapped asset process (staking) involves the use of a certain forms of backing (collateral) and custodian. The original asset is locked on the original network, and an equivalent amount of the wrapped token is issued on the other network. Wrapped assets maintain the same value as the original asset, a feature that makes them easily tradable and more liquid, and overall usable in other blockchain ecosystems. This process allows the asset to easily interact with decentralized finance (DeFi) protocols, smart contracts, and decentralized applications (dApps) on the target blockchain.



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FOREX (foreign exchange) revolves around trading the foreign currency exchange in the over-the-counter market. It is where a given currency is converted to ...
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