Define Wrapped and How does Wrapped XRP (wXRP) work
Wrapped XRP (wXRP) is a cryptocurrency that is pegged and usable on blockchains other than the XRP Ledger used by Ripple. Ripple is a blockchain-based global payments system that offers cryptocurrency solutions for enterprises. Its wrapped counterpart, wXRP, which has the same value, can be used for financial transactions and settlements on other blockchains.
This article will cover the necessity of wXRP, how to purchase it, warp use cases, and the function and security of wXRP tokens.
Define cryptocurrency bundles
Tokens that are utilized as cryptocurrencies on blockchains other than the one they were first built on are known as wrapped cryptocurrencies. Wrapped cryptocurrency has the same value as its parent cryptocurrency. This increases the utility of cryptocurrencies like Bitcoin BTC $16,929, Ether ETH $1,262, or XRP by enabling their use on chains other than their home blockchains.
Wrapped coins serve as a solution to the cross-chain liquidity issue in decentralized finance (Defi). If a cryptocurrency remains within its ecosystem, only that environment’s demand can drive growth. In essence, it would be working in a closed system.
This problem is resolved by wrapping crypto by enabling blockchain interoperability between various cryptocurrencies and blockchains. This increases the usability of crypto assets and provides opportunities for Defi ecosystems to improve cross-chain liquidity.
Define Wrapped XRP (wXRP)
A cryptocurrency called XRP powers transactions on the Ripple Network and utilizes the native XRP Ledger. To finance transactions, invest, or exchange cryptocurrencies on Ripple, one can buy XRP. Wrapped XRP will be utilized for any transaction involving the use of XRP on a blockchain other than the Ripple network.
The ability to use XRP on blockchains other than its original XRP Ledger is increased by wrapping it. For instance, warp on the Ethereum blockchain would allow users to employ Ethereum wallets, decentralized apps (DApps), games, and more to diversify their holdings and convert XRP into a yield-bearing asset.
What divides wrapped XRP (wXRP) from XRP
Wrapped XRP is the same as XRP. Arbitrage has caused its value to be tied to XRP, just way stablecoins like USD Coin (USDC) or Binance USD (BUSD) are tied to the US currency. WXRP is held by a custodian who ensures that each warp is backed by an equivalent XRP reserve and that it is completely collateralized. A 1:1 ratio applies to both wrapping and unwrapping. On the blockchain, there are no costs other than transaction fees.
Users who want to wrap their XRP can do so by sending their cryptocurrency to a smart contract, which will then provide the wrapped tokens to them. When someone else unwraps their wrapped token, the XRP is saved and then returned. A wrapped XRP token can be unwrapped at any time. As a result, users have the opportunity to easily convert between warp and XRP depending on their needs and the blockchain they are using.
How is wrapped XRP (wXRP) applied
XRP can be utilized on blockchains other than the XRP Ledger through the wrapping. But exactly how does this operate? Cryptocurrencies that have been wrapped require a custodian who can ensure that both the original cryptocurrency and its wrapped counterpart have the same value.
The custodian could be any entity, including a coding rule, a smart contract, a multi-sig wallet, or a decentralized autonomous organization (DAO). The process by which the custodian wraps the cryptocurrency and then burns it back to its original form is known as minting. The smart contract acts as the custodian for XRP.
While the original XRP is stored with a custodian, when a user wraps XRP, the smart contract gives them the wrapped version to use on other blockchains. When someone opens their warp, it is put back into circulation. The original form is then returned to the XRP Ledger blockchain from where it originated. As a result, each warp is supported by a single XRP in reserve, helping to keep its peg in place.
Why is Wrapped XRP (wXRP) necessary
XRP holders can gain a lot from wrapping their coins. A few of these are:
Interoperability:
For owners of XRP, wrapping improves blockchain interoperability. It makes it possible for XRP holders to gain from trade advantages across several chains. Additionally, it offers the chance to employ the services of different DApps or Defi protocols, enabling better use cases and greater returns.
Liquidity:
The improvement in liquidity that comes with the use of wrapped tokens is a big advantage. A well-known cryptocurrency called XRP is listed on several centralized and decentralized exchanges (DEXs).
For owners of XRP, this creates more opportunities to diversify their holdings and ensure liquidity, particularly in Ethereum’s mature Defi ecosystem, which has a wide range of possibilities. wXRP pool pairings are available on CEXs like Binance and DEXs like Uniswap and SushiSwap for staking, exchanging lending, and other uses.
How is XRP packaged and unpacked
It’s crucial to be able to wrap your cryptocurrency if you own XRP and want to utilize it on other blockchains. One can wrap or unwrap XRP using Wrapped.com from TokenSoft, which is the top distributor of wrapped cryptocurrencies. They offer the foundation for wXRP to be mobilized on the Ethereum blockchain, working with Hex Trust as the custodian.
Create an account using their Typeform, and wrapped.com will display conversion information. Wrapped.com provides a direct connection for SushiSwap using the MetaMask wallet. Through alternative wrapping service providers, such as ApexSwap, which connects Avalanche and the XRP Ledger, XRP can also be wrapped on a variety of blockchains.
Do wrapped tokens have security
Cryptocurrencies have become effective and practical thanks to wrapped tokens. To enable users to conduct transactions securely, protocols like Ethereum convert bundled cryptocurrency into ERC-20 tokens. The custodian who retains the underlying asset, however, is one of the potential weak points for wrapped tokens. Token owners of the wrapped XRP would be left with a worthless asset if the custodian went rogue and unlocked and released the original XRP to someone else.
In this transaction, the custodian serves as a central entity and needs to be a reliable party. Hex Trust, Asia’s top digital asset custodian, has been selected by Ripple as the trusted party in the instance of XRP. To assure wrapped token safety, such well-verified networks and their custodians frequently support warranties and insurance.
FAQS:
Q1. Define WXRP coin
Jed McCaleb and Chris Larsen launched Ripple in 2011, and the company’s native token is XRP. The 100 billion tokens that make up the whole supply of XRP were premined. Compared to bitcoin, XRP is more efficient, faster for transactions, greener, and scalable.
Q2. What is the maximum price that XRP can achieve?
In 2026, it is expected that the price of XRP would at least reach $1.11. With an average price of $1.14 during 2026, the XRP price can go as high as $1.27. The average XRP price is anticipated to be $0.5119 by the end of 2023.
