Summary

Wrapped XRP is an XRP-pegged token that can be used on blockchains other than the XRP ledger. The wrapped assets can be exchanged for XRP in the custodian's reserve fund at a ratio of 1:1 in order to wrap XRP and unpack the wrapped XRP.

The price of wrapped XRP is pegged to XRP for arbitrage reasons. When the price of wrapped XRP is high, traders wrap low-priced XRP and sell it as wXRP to drive down the price. If the price of wrapped XRP is depressed, traders will buy wXRP and unwrap it, selling it as XRP, thereby increasing the price of wXRP. In this way, the two tokens establish a stable peg.

Users can use the DApp ecosystem of different blockchains by packaging XRP and create a diversified investment portfolio on the chain. To invest in this asset, purchase Wrapped.com’s ERC-20 Wrapped XRP (wXRP) via Binance. wXRP’s reserves are managed by Hex Trust, an approved custodian. Users can wrap XRP by registering a Wrapped account. Staking wXRP to a liquidity pool provides token pairs for platforms such as Uniswap and Sushiswap.

Introduction

Common cryptocurrency portfolios include tokens and coins across multiple blockchains kind. However, managing and investing in such assets is tricky, especially when blockchains are not interoperable. One way to overcome this problem is to bridge various currencies between chains by wrapping tokens. Wrapped versions of Bitcoin (BTC) and Ethereum (ETH) have become commonplace among decentralized finance (DeFi) platforms and exchanges. Now, we have a brand new Wrapped asset available, Wrapped XRP (wXRP).

What is wrapped XRP?

Users can use XRP in blockchains other than the native XRP ledger by wrapping XRP. For example, after Ethereum wraps XRP, wXRP can be transferred, pledged and traded through Ethereum DApp and wallet.

Each wrapped token can be unwrapped and converted to original XRP at a 1:1 ratio. The wrapped token is pegged to the price of XRP and reflects XRP’s price movements. The token contract wXRP specifically refers to the wrapped XRP created by Wrapped and used in Ethereum. XRP can also be packaged in other blockchains through additional packaging providers.

How does wrapping XRP work?

To maintain the peg to XRP, all wrapped XRP is backed by the corresponding XRP reserve. When users wrap XRP, they usually send the tokens they hold to the smart contract that provides the wrapped tokens. This XRP is stored and later returned after someone else removes the wrapping from the token.

Wrapped XRP and XRP can be freely converted, and the two remain pegged, similar to the relationship between BUSD and the U.S. dollar (USD). When the price of wrapped XRP is lower than the price of XRP, traders buy low-priced wrapped XRP and sell it after it is unwrapped. This arbitrage trade would increase market demand for wrapped XRP and reduce supply, raising its price to the pegged level. If the price of packaged XRP is higher than the price of XRP, traders will package the XRP and sell it. Doing so would increase selling pressure and supply of wrapped XRP, driving its price down to the peg level.

Why do you need to wrap XRP?

Wrapped XRP provides several major advantages to XRP holders and users in the target blockchain:

1. After packaging, DeFi protocols and DApps of other blockchains can be accessed. For example, Ethereum has a large and complete DeFi ecosystem, and XRP holders can stake and use tokens in new ways. This advantage creates more use cases for XRP.

2. Investors who only use the Ethereum blockchain can build a diversified investment portfolio through XRP. Managing assets across multiple blockchains is not only time-consuming, but also often requires having different cryptocurrency wallets. XRP is a popular large-cap token that is packaged to attract new users who can access the native token on the blockchain of their choice.

Who is Wrapped? What is Wrapped XRP (wXRP)?

Wrapped is a blockchain project that provides audit wrapping services across multiple blockchains and currencies. The team consists of Tokensoft and its custodians, namely Anchorage, Hex Trust and Coinmetro, who are responsible for staking the reserves required to wrap the tokens.

Wrapped has extensive experience in wrapping token management and will offer ERC-20 wrapped XRP in Ethereum in December 2021. wXRP’s reserves are held by Hex Trust, a licensed and insured Asian custodian. Users can easily trade tokens on Binance.

How to wrap XRP and unpack wXRP?

To wrap XRP or unwrap wXRP, users need to create a Wrapped account using Typeform. Wrapped will then contact the user with details on how to convert XRP to wXRP.

In which decentralized finance (DeFi) apps can wXRP be used?

If you want to invest in wXRP, Ethereum has a wide variety of DeFi DApps to explore. In most decentralized exchanges (DEX), users can join or create liquidity pools with wXRP trading pairs. By providing liquidity, users can begin to earn fees for others to use the capital pool to exchange.

However, please do not forget that if the price ratio of the trading pair changes, impermanent losses will lead to a reduction in personal deposit funds. A feasible way is to stake the wXRP/wETH and wXRP/USDC trading pairs through SushiSwap. Using an established pool of funds with higher liquidity reduces the risk of impermanent losses. Uniswap also operates a fund pool, and users can join it by holding a trading pair of wXRP and another token.

Conclusion

The packaging of tokens is to improve cross-chain functionality and A great step forward for interoperability. Users keen on Ethereum DeFi can now try holding and investing in XRP. If you already hold XRP, you have access to the Ethereum ecosystem and you have tons of opportunities to explore. No matter which user group you belong to, be sure to use auditable and trustworthy wrapped tokens.