Wrapped Token

Definition

A wrapped token is a tokenized version of a cryptocurrency from another blockchain. The original asset is locked in a smart contract, and an equivalent token is minted on the target chain. Wrapped Bitcoin (WBTC) on Ethereum is the most common example.

Technical Explanation

Wrapping involves: depositing original tokens to a custodian or smart contract, minting equivalent wrapped tokens on the destination chain. Unwrapping reverses this: burning wrapped tokens, releasing originals. The peg maintains 1:1 backing.

Trust models vary: centralized custodians (simple but trusted), federated bridges (multi-sig custody), decentralized bridges (smart contracts with complex security). Each has different trust assumptions and risk profiles. Bridge exploits have caused significant losses.

SynX Relevance

Wrapped SYNX could enable usage on other chains, but introduces bridge trust assumptions. Native SYNX provides full quantum resistance; wrapped versions depend on destination chain security. Future interoperability will balance accessibility with security preservation.

Frequently Asked Questions

Are wrapped tokens as secure as native tokens?: Security depends on the bridge mechanism. Bridge exploits are a significant risk category.
Can I unwrap back to native SYNX?: If a wrapping mechanism exists, unwrapping should be supported for 1:1 redemption.
Why would I want wrapped SYNX?: To use SYNX in DeFi or applications on other chains. But consider security tradeoffs.

Native security, optional interoperability. Explore SynX