Wrapped digital currencies are digital currencies that represent other digital assets, such as major digital currencies such as Bitcoin (BTC) or Ethereum (ETH), and have been wrapped or packaged within another blockchain to be tradable on other networks.
Encapsulated cryptocurrencies are often used to provide a representation of assets from different blockchains within a given blockchain, allowing these assets to be traded across other networks and protocols in a standardized manner.
Examples of cryptocurrencies include:
1. Wrapped Bitcoin (WBTC): WBTC is a representation of Bitcoin (BTC) within the Ethereum blockchain. WBTC holders can trade it on the Ethereum network and use it in DeFi applications without having to leave the blockchain.
2. Wrapped Ether (WETH): WETH is a representation of Ethereum (ETH) within the Ethereum blockchain. WETH holders can use it to trade and interact with DeFi applications built on the Ethereum blockchain.
3. Wrapped Litecoin (WLTC): Similar to WBTC and WETH, WLTC represents Litecoin (LTC) within another blockchain.
4. RenBTC: RenBTC represents Bitcoin (BTC) assets within other blockchains using the RenVM protocol.
5. sBTC (Synthetic Bitcoin): It is an encapsulated digital currency representing Bitcoin (BTC) within the Ethereum blockchain, which is part of decentralized financial protocols.
Encapsulated digital currencies are a way to contribute to providing compatibility between different blockchains and enabling the exchange of value between them without the need to rely on central intermediaries.
