Wrapped tokens

A wrapped token is an ERC-20 that represents a 1:1 claim on a different asset — either a non-ERC-20 coin on the same chain or an asset from a foreign chain. The canonical example is WETH: ETH itself isn't ERC-20 (it predates the standard), so you can't trade raw ETH directly in a Uniswap pool; you wrap it into WETH first, which is just a contract holding your ETH and minting an ERC-20 claim against it. WBTC does the same for Bitcoin — a custodian holds BTC, mints WBTC on Ethereum, and you can now use Bitcoin in Ethereum DeFi. The key risk is the wrapper itself: WETH is trustless (pure code), but WBTC depends on a company (BitGo) actually holding the BTC. Trustless wraps are infrastructure; custodial ones are a bet on the custodian.