Résumé

Wrapped XRP is a token attached to XRP that can be used on blockchains other than the XRP Ledger. The wrapped asset is exchangeable at a rate of 1:1 to the XRP held by a custodian who facilitates the wrapping of the XRP and the unwrapping of the wrapped XRP.

The price of Wrapped XRP is linked to that of XRP thanks to the arbitrage carried out. When the price of Wrapped XRP is higher, traders wrap cheaper XRP and then sell wXRP, lowering its price. When the price of Wrapped XRP is lower, traders buy and unwrap wXRP and sell XRP, which increases the price of wXRP. This creates a stable link between the two tokens.

Wrapping XRP allows you to use the DApp ecosystem of a different blockchain and diversify your portfolio on that chain. If you want to get started, you can buy wXRP ERC-20 tokens from wrapped.com on Binance. wXRP reserves are managed by licensed custodian Hex Trust, and you can start wrapping wXRP by creating an account on Wrapped. You can use wXRP to stake liquidity pools by providing it in a token pair on platforms like Uniswap and Sushiswap.

Introduction

A typical cryptocurrency portfolio should have coins and tokens on multiple blockchains. However, managing and investing all these assets can be complicated, especially when blockchains are not interoperable. One way to overcome this problem is to use wrapped tokens to transfer assets from one chain to another. Although wrapped versions of Bitcoin (BTC) and Ether (ETH) are already known across decentralized finance (DeFi) platforms and exchanges, we now have a new wrapped asset to work with: Wrapped XRP (wXRP).

What is Wrapped XRP?

Wrapping XRP allows you to use XRP on blockchains other than the native XRP Ledger. For example, Wrapped XRP on Ethereum would allow you to transfer, stake and trade wXRP on DApps and Ethereum wallets.

Each wrapped token can be unwrapped and converted to original XRP at a 1:1 ratio. The wrapped token is also linked to the price of XRP and tracks its price movements. The wXRP token symbol specifically refers to the Wrapped XRP on Ethereum created by Wrapped. XRP can also be wrapped on other blockchains through alternative wrapping providers.

How does Wrapped XRP work?

To maintain its connection to XRP, each Wrapped XRP is backed by a single XRP in reserve. When users wrap their XRP, they typically send their assets to a smart contract that provides the wrapped tokens. XRP is stored and then returned when someone else withdraws their wrapped token.

This free conversion capability between Wrapped XRP and XRP maintains the link, just like BUSD with the United States Dollar (USD). When the price of Wrapped XRP is lower than the price of XRP, traders will buy the cheaper Wrapped XRP to unwrap it and sell the XRP. This arbitrage will increase the demand for Wrapped XRP and reduce its supply, increasing its price until it reaches the price of XRP. If the price of Wrapped XRP rises above the price of XRP, traders will wrap the XRP to sell it. This action will increase the selling pressure and supply of Wrapped XRP, which will reduce its price until it returns to the same price as XRP.

Why is it necessary to wrap XRP?

Wrapping XRP has several advantages, both for holders of XRP and users of the target blockchain:

1. Wrapping allows access to DeFi protocols and DApps on other blockchains. For example, Ethereum has a large, well-developed DeFi ecosystem, and XRP holders will be able to stake and use their tokens in new ways. This advantage creates even more use cases for XRP.

2. Investors who only use the Ethereum blockchain can diversify their portfolios with XRP. Managing assets across multiple blockchains is time-consuming and often requires different cryptocurrency wallets. XRP is a popular large-cap currency, and wrapping will bring it a new audience who can access the currency natively on the blockchain of their choice.

Who are Wrapped and what is Wrapped XRP (wXRP)?

Wrapped is a blockchain project that provides verified wrapping services across multiple blockchains and currencies. The team is made up of Tokensoft and its custodians (Anchorage, Hex Trust and Coinmetro) who manage the reserves necessary to guarantee the wrapped tokens.

Wrapped already manages a basket of wrapped tokens and has been offering Wrapped XRP ERC-20 on Ethereum since December 2021. wXRP reserves are held by Hex Trust, a licensed and insured custodian in Asia, and you can easily trade the token on Binance.

How to wrap XRP and unwrap wXRP?

If you want to wrap XRP or unwrap wXRP, you need to create a Wrapped account using this Typeform. Wrapped will then contact you to provide more details on how you can start converting your XRP or wXRP.

With which DeFi applications can I use wXRP?

If you want to invest your WXRP, Ethereum has a wide range of DeFi DApps to explore. You can join or create a liquidity pool with a wXRP pair on almost any decentralized exchange (DEX). By providing liquidity, you can start earning commissions from users who trade using the pool.

However, remember that non-permanent loss may result in a decrease in your deposited funds if the balance price ratio changes. For example, you can go through SushiSwap and use their wXRP/wETH and wXRP/USDC pairs. Using an established pool with increased liquidity can reduce the risk of intermittent loss. Uniswap also has pools that you can join with wXRP and another token in a pair.

Conclusion

Wrapping tokens is a great step to improve functionality and interoperability between chains. If you are a fan of DeFi on Ethereum, you now have the opportunity to benefit from it by holding and investing in XRP. If you are an XRP holder, there are a huge amount of possibilities to explore now that you have access to the Ethereum ecosystem. Regardless of which group you belong to, be sure to use a trusted, auditable wrapped token.