Wrapped Token
Strict Definition
"A digital asset that allows the value of one cryptocurrency from one blockchain to be used on another blockchain (e.g., Wrapped Bitcoin - wBTC on Ethereum)."
Liability Check // Risk Analysis
The 'Custodial Risk'. wBTC is 'wrapped' by a central custodian. If that custodian loses the BTC or goes bankrupt, the wBTC on Ethereum becomes a worthless token pointing to empty reserves.
Knowledge Context // Related Terms
Auditor NotesVS-AN-2026
"Prefer 'Decentralized Wrappings' (e.g., tBTC) for mission-critical DeFi vaulting to minimize reliance on a single corporate custodian."
"Always check the 'De-peg' ratio of wrapped assets during market volatility. If they trade below the 1:1 price, exit the position immediately."
"Treat wrapped tokens as 'Synthetic Derivatives' for tax purposes if your jurisdiction differentiates between native and wrapped assets."
SCHEMA_VER: AEO_3.2
LAST_AUDIT: 1/8/2026
HASH: H8SQP9