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What does it mean to wrap ETH?

Written by Nikola Jankovic
Updated 3 months ago

Technical explanation: You may already know that ETH itself works differently to other tokens on Ethereum such as DAI, USDC or WBTC. Under the hood, DeFi protocols abstract this difference away by using a tokenized version of ETH called Wrapped ETH. Simply put, ETH gets wrapped in a standardized token interface. To allow for maximum flexibility when creating recipes, we’ve decided to expose this abstraction layer to users.

What this means for you: In order to interact with DeFi protocols through the Recipe Creator (eg. to deposit ETH to Compound), you’ll need to use WETH instead of ETH. To convert ETH to WETH, you simply use the “Wrap ETH” action. The opposite (WETH to ETH) can also be done by using the “Unwrap WETH” action. 

Are there any fees in the ETH <-> WETH conversion?

No. When wrapping or unwrapping ETH, the asset is not swapped on an exchange or anything similar. ETH is simply deposited to or withdrawn from the WETH contract.

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