WETH is Wrapped Ether. WETH is not generated by pledging BTC like WBTC. It is a contract that wraps ETH into WETH, and it is almost impossible to make mistakes.
This contract holds billions of dollars of ETH, and users can exchange ETH for WETH or WETH for ETH at any time.
Why is WETH needed?
ETH can be used as a fuel fee on Ethereum, but it was born earlier than the ERC-20 format and is not an ERC-20 standard token.
In Ethereum’s on-chain operations, authorization is required when using ERC-20 tokens to interact with new contracts, but ETH does not, because the two follow different standards.
For some DeFi applications that only accept ERC-20 tokens, 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.
