The cryptocurrency area is becoming increasingly interconnected as developers create a cross-based bridge between the Ethereum blockchain and Tezos. With the launch of the Wrap protocol created by Bender Labs, Ethereum-based ERC-20 and ERC-721 tokens can be made compatible with Tezos, allowing ETH (ETH) holders to interact with Tezos’ ecosystem.
Wrapping the token has become a popular way to connect users of heterogeneous blockchain platforms, and perhaps the best example of this is Wrapped Bitcoin (WBTC), which is a version of Bitcoin (BTC) of the ERC-20 standard that runs on Ethereum.
Wrap Protocol makes Ethereum-based tokens Tezo’s FA2 token standard, which means they can be used as a unique representation without technical difficulties or price differences.
Like Ethereum, Tezos has its own decentralized financing system. Unlike Ethereum, which has to wait about a year before switching to a consensus algorithm to confirm its efforts, it is already widespread to play on Tezos, giving ETH holders a significantly early opportunity to earn some passive income.
Users of the Wrap protocol participate in managing it with a WRAP token that is compatible with both Tezos and Ethereum, running on both FA2 and ERC-20 infrastructure.
The success of Wrapped Bitcoin can be seen in the market value of 8 billion dollars, which represents the value of BTC hosted on Ethereum. It is currently the fifth largest Ethereum token after Tether (USDT), UNI from Uniswap, LINK from Chainlink and USD Coin (USDC), and the 19th largest cryptocurrency project in total. As of now, WBTC on Ethereum’s most popular DeFi protocol, Uniswap, is just under $ 200 million.
Temporary transfer of premium currencies to other blockchain chains is also a way to avoid high fees if the parent company is associated with high transaction costs. This could have been the case with WBTC at a time when Ethereum’s commission was only a small fraction of Bitcoins. This is no longer the case due to the increase in the Ethereum user base and subsequent congestion, which led to large transaction costs as the average commission rose to more than thirty dollars.
Tezos’ latest blockchain statistics show that transactions sent between $ 0.01 and $ 0.15 exceed $ 1 million, indicating a potential immediate use of the Wrap protocol. However, it faces competition from Layer 2 protocols that already fit this utility case for Ethereum users.
Bender Labs CEO Hugo Renaudin said the code-based infrastructure is more suitable for older financial systems because of its transparency and stability, adding that he views Bender Labs’ work as creating an independent bank.
“We are building a turnaround: an autonomous bank for an open financial system because we believe that financial markets should be open, transparent, unstoppable and largely dependent on symbol lines, not brokers,” Reynoden said.