A Wrapped Token is a cryptocurrency whose value has been pegged to the value of another token 1:1.

The values of the two tokens are exactly the same, the value of one backing the value of the other one for one.

The tokens are identical, with the only distinction being that they exist on different blockchains.

Take BTC for instance, which operates on the Bitcoin blockchain.

In its present form, it can’t operate on, or talk to, the Ethereum blockchain.

But by wrapping it, you’re taking “regular” Bitcoin (BTC) and exchanging it for a version that has the same price as bitcoin but can operate on the Ethereum blockchain.

This solves the problem of blockchain interoperability.

The wrapping process takes the BTC and mints a corresponding amount of wBTC.

The wrapped token becomes a sort of bridge between the two chains.