Brief content

Wrapped XRP is a token tied to XRP that can be used on blockchains other than the XRP ledger. The wrapped asset can be exchanged 1:1 for XRP held in reserve by the custodian, facilitating XRP wrapping and wXRP deployment.

The price of wXRP is tied to XRP through arbitrage. When the price of wXRP is higher, traders flip the cheaper XRP and then sell the wXRP, driving its price down. When the price of wrapped XRP is lower, traders buy and unwrap wXRP and sell XRP, increasing the price of wXRP. This creates a stable binding between the two tokens.

Wrapping XRP allows you to use the DApp ecosystem of another blockchain and diversify your portfolio in this chain. If you want to get started, you can buy ERC-20 Wrapped XRP (wXRP) from Wrapped.com through Binance. wXRP reserves are managed by licensed custodian Hex Trust and you can start wrapping wXRP by registering a Wrapped account. You can use wXRP for staking in liquidity pools by providing it in a token pair on platforms like Uniswap and Sushiswap.

Introduction

A typical cryptocurrency portfolio will likely consist of coins and tokens on multiple blockchains. However, managing and investing in all these assets can be difficult, especially when the blockchains are incompatible. One way to overcome this is to use wrapped tokens to transfer coins from one chain to another. While wrapped versions of Bitcoin (BTC) and Ether (ETH) are already familiar on decentralized finance (DeFi) platforms and exchanges, we now have a new wrapped asset to work with: wrapped XRP (wXRP).

What is wrapped XRP?

XRP wrapping allows XRP to be used on blockchains other than the native XRP ledger. For example, XRP wrapped in Ethereum will allow you to transfer, stake and exchange wXRP using Ethereum DApps and wallets.

Each wrapped token can be unwrapped and converted to original XRP at a 1:1 ratio. The Wrapped token is also tied to the price of XRP and reflects its price movement. The token symbol wXRP refers directly to Wrapped XRP on Ethereum, which was created by Wrapped. XRP can also be wrapped on other blockchains through alternative wrapping providers.

How does wrapped XRP work?

To maintain the XRP binding, each wrapped XRP is backed by one XRP in reserve. When users wrap their XRP, they typically send their coins to a smart contract that provides wrapped tokens. XRP are stored and then returned when someone else unwraps the wrapped token.

This ability to freely convert between wrapped XRP and XRP supports a peg, just as BUSD supports a peg to the United States Dollar (USD). When the price of wrapped XRP falls below the price of XRP, traders buy cheaper wrapped XRP and unwrap them to sell XRP. This arbitrage increases the demand for wrapped XRP and reduces its supply, increasing the price until it reaches the peg price. If wrapped XRP rises above the price of XRP, traders will wrap XRP to sell. This action will increase seller pressure and the supply of wrapped XRP, driving its price down until it breaks even.

Why do we need to wrap XRP?

Wrapping XRP provides several benefits to both XRP holders and users of the target blockchain:

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

2. Investors who only use the Ethereum blockchain can diversify their portfolios with XRP. Managing assets across multiple blockchains takes time and often requires different crypto wallets. XRP is a popular large cap coin and its wrap will bring a new audience who can easily access the coin on their chosen blockchain.

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

Wrapped is a blockchain project that provides proven wrapping services for multiple blockchains and coins. The team consists of Tokensoft and its custodians (Anchorage, Hex Trust and Coinmetro), which manage the reserves required to secure wrapped tokens.

Wrapped already operates a basket of wrapped tokens and offers ERC-20 Wrapped XRP on Ethereum from December 2021. wXRP reserves are held by Hex Trust, a licensed and insured custodian in Asia, and you can easily trade tokens 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 form. Wrapped will then contact you with more details on how you can start converting your XRP and wXRP.

What DeFi applications can I use wXRP with?

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

However, keep in mind that volatile losses can lead to a decrease in the amount of your deposited funds if the price ratio of the pair changes. One option is to stake through SushiSwap in their wXRP/wETH and wXRP/USDC pairs. Using an established pool with higher liquidity can reduce the risk of erratic losses. Uniswap also has running pools that you can join with wXRP and another token in the pair.

Conclusion

Token wrapping is a great step in improving cross-chain functionality and compatibility. If you are a fan of Ethereum DeFi, now is your chance to experiment with storing and investing in XRP. If you own XRP, you now have access to the Ethereum ecosystem. Regardless of which group you belong to, be sure to use a trusted, verifiable wrapped token.