A wrapped token is a cryptocurrency that has been tokenized. It is linked to the value of the asset it represents and may normally be redeemed (unwrapped) at any time. It often represents an asset that does not exist natively on the blockchain on which it is issued.
Wrapped tokens may be considered as stablecoin’s siblings. The sole distinction is that a stablecoin is linked to fiat money, while a wrapped token is linked to cryptocurrency. Wrapped tokens, like any other cryptocurrency, may be traded on exchanges.
As blockchains are separate systems, there is no viable mechanism to move information between them. Wrapped tokens improve interoperability across blockchains by allowing the underlying tokens to move cross-chain.
The regular users don’t have to worry about the wrapping and unwrapping process; they can just trade these wrapped tokens like any other cryptocurrency.
