How is wBTC wrapped, and how can I wrap a token on another blockchain?

#1

How is wBTC wrapped, and how can I wrap a token on another blockchain?

#2

The wbtc whitepaper covers the technical detail: https://www.wbtc.network/assets/wrapped-tokens-whitepaper.pdf

The short answer is that WBTC is an IOU for BTC. The BTC rests in the private keys of a custodian. It’s fairly easy to check both chains to see that the assets held by the custodian match the issued WBTC, but if the custodian ever got hacked or for whatever reason stopped redeeming WBTC tokens for BTC, the WBTC tokens would become pretty much worthless.

WBTC is not like WETH, which is managed entirely by a smart contract with nobody responsible for the keys.

If you want to wrap tokens from another blockchain, create an ERC20 token, convince people to send you their token from the other blockchain and issue them your ERC20 token in exchange, with a promise that their ERC20 token will always be redeemable for the token from the other chain. That’s pretty much all WBTC has done, with some good marketing to make it look like that’s not what they did.

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