What is a Wrapped NFT: The Next Segment in Crypto Collectibles?

A wrapped object is a tokenized form of a digital currency that already exists. The item is generally backed by an actual currency, which an owner can exchange for the coin at any moment. However, are wrapped goods supported by cryptocurrency? So, how did the Devs get around building-wrapped items even when the token was already wrapped?

The blockchain network provides the foundation for all of these digitized commodities. Everyone, though, is unique and intended to fulfill a certain function. Therefore, to comprehend how a wrapped asset is not a cryptocurrency-backed stable coin, one should first comprehend why wrapped assets were created.

NFTs are a type of digitized commodity that was developed on the Ethereum platform. They are not intended to tackle blockchain's fundamental constraints, like stable coins and wrapped assets, but to provide fresh blockchain usage scenarios. Because the bulk of NFTs follows the Ethereum ERC-721 protocol, tokens on a similar smart contract might have multiple valuations. When they have sufficient ETH for the calculations needed in minting NFTs and are linked to a market, ETH owners can generate an NFT.

Most NFTs adhere to the ERC-721 protocol, which assigns every token a distinct identifier and specifies how to trade them. Unlike the ERC-20 protocol for cryptocurrency tokens, which allows tokens to be transferred in multiple copies and fragmented, this one does not.

In some respects, the fact that NFTs are distinct is a benefit; one will have one CryptoKitty valued handful of bucks, while some others have many uncommon features and are valued at several thousands of dollars. What if we intended to swap a stockpile of 1,000 CryptoKitties for their ground worth, which is the lowest price at which somebody will acquire them in the marketplace?

Usually, you would have to promote every one separately and auction each one at a time. Would it not be more convenient to have greater flexibility in the marketplace for a base price CryptoKitty so that one might sell them all at once?

WrappedKitties addressed the issue by creating a token, WCK that can be exchanged 1:1 for a CryptoKitty. As a result, it has evolved into a valuable currency for the ecosystem, providing stability in the marketplace and establishing a standard baseline price for all CryptoKitties.

Since Ether and Bitcoins are two independent cryptocurrencies with distinct systems, you will need a gateway to utilize BTC in an Ether smart contract. WBTC is required to make this happen. It is simply a proxy, or a connection, to actual Bitcoin that is kept in deposit.

One WBTC is created for each BTC stored in a deposit and spent on Ethereum. We also have ETH wrapped in a separate currency, WETH, which is a bit puzzling. That is because, unlike every other ERC-20 token, ETH is the indigenous economy of the Ethereum network, rather than a token produced via a smart contract on Ethereum.

Therefore, if you would like to deal with ETH in the similar manner you do with other tokens, you will need to wrap that in that framework and follow similar rules. Wrapping Tokens for currency enables users to keep multiple copies of NFTs in their wallets. It also enables the establishment of baseline availability for other tokens, like WCK/ETH, in the marketplace. Nevertheless, not all NFTs follow the same guidelines. Each one has its unique ‘Plugin' for dealing with it - generating tokens, transmitting tokens, and showing information, for instance.

Some prominent tokenized collectibles, like CryptoPunks and Rare Pepes, precede the recognized standards or are on a separate blockchain, and hence cannot be engaged with or advertised on public markets like OpenSea.

Wrapped CryptoPunks enable CryptoPunks to be sold on the platform independent of their native market. These NFTs acquired a new market and fetch a higher price after being published on Rarible.