What is Wrapped Ether (WETH)

The ERC-20 standard was created to allow the interoperability between different decentralized Ethereum-based platforms (Decentralized Apps DApps, Decentralized Exchanges DEX, etc.) each with its own alt token. ERC-20 by setting the guidelines and rules for fungible token creation based on the Etherum blockchain, systematizes the methods of transferring these alt tokens and recording transactions. This helps create a coherent Ethereum ecosystem where the various tokens can communicate and transact with each other without an additional layer of complexity.

However, Ether itself is not compatible with the ERC-20 standard, because it was created before ERC-20 was developed. Therefore, as a solution, Wrapped Ether WETH emerged. 1 WETH is equal to 1 ETH but is instead ERC-20 compliant. Wrapping is basically just trading an ETH for a WETH using a smart contract, and unwrapping is trading a WETH again for an ETH using the same smart contract.