Analysis of the difference between WETH and WBTC: Why is it almost impossible for WETH to have a thunderstorm?
Original Author: Jiang Haibo
With the Genesis thunderstorm and the sharp decoupling of grayscale GBTC, the WBTC/BTC conversion ratio is also slightly lower than 1. Under various unfavorable external conditions, FUD spread further to WETH. Under the jokes of various big Vs, some users were misled into thinking that WETH was risky.
Let me talk about the conclusion first. It is almost impossible for WETH to be thundered. The pictures circulating on the Internet about the exchange ratio of ETH and WETH in Uniswap are not 1 may come from the P picture or the counterfeit currency issued by itself.
Why is it impossible for WETH to have a thunderstorm?
The full name of WETH is Wrapped Ether, which is the encapsulated ETH. The contract wrapping ETH into WETH is so simple that it's almost impossible to make mistakes. And the contract has existed for many years, saving billions of dollars of ETH, users can exchange ETH for WETH or WETH for ETH at any time. Commonly used DEXs such as Uniswap also provide exchange entrances.
It can also be seen from the Ethereum blockchain browser Etherscan that as of the afternoon of November 28, the total number of WETH issued was 3,799,267, and the address also held exactly the same amount of ETH.
Why is WETH needed?
Since ETH and WETH can be completely exchanged 1:1, why is WETH needed?
In the on-chain operations of Ethereum, careful friends may find that when using ERC-20 Token to interact with new contracts, authorization operations are required first, while using ETH does not, and the two follow different standards. ETH can be used as a fuel fee on Ethereum, but it was born earlier than the ERC-20 format and is not a Token of the ERC-20 standard. For some DeFi applications that only accept ERC-20 Token, ETH that is not in this format cannot be accepted, so WETH in ERC-20 format appears.
For some contract developers, they can save development time by using WETH directly instead of developing additional contracts that support ETH. For example, if you want to use ETH to provide liquidity or borrow as collateral, you may need to convert ETH to ERC-20 standard WETH first.
The difference between WETH and WBTC
Although the names of WETH (Wrapped Ether) and WBTC (Wrapped Bitcoin) look similar, the principles of their issuance are completely different. PANews also wrote an article to introduce the relevant mechanism of WBTC in detail.
Because the original BTC exists on the Bitcoin network, to use it in the Ethereum smart contract, the original BTC can only be cross-chained to the Ethereum network.
Alameda Research, which has already been thundered, was once the largest merchant of WBTC. Some people worry that WBTC will be thundered, but this worry is unnecessary. The merchants and custodians of WBTC on Ethereum are controlled by a multi-signature contract, and the keys of the multi-signature contract are held by well-known institutions in the encryption field.
Kyber's CEO Victor Tran proposed on GitHub on November 25 that the WBTC Big DAO will be migrated to a new signature contract, the number of voters will be changed from 11/18 to 8/13, and the FTX-related Blockfolio (FTX) address will be deleted. New members include B.Protocol, Badger, Balancer, BitGo, Chainlink, Compound, Gopax, Krystal, Kyber, Loopring, Multichain, Ren, Tom Bean.
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