Wrapping exists because assets cannot move between chains directly. The original is locked with a custodian or a bridge contract, and an equivalent token is issued on the destination chain; redeeming burns the wrapped version and releases the original. This is how Bitcoin comes to be usable in Ethereum DeFi.
The wrapped token is only ever as good as whoever holds the original. If the custodian fails or the bridge contract is exploited, the wrapped tokens remain in circulation with nothing behind them, and bridge exploits account for several of the largest losses in the sector. A wrapped asset is a claim, and it is worth checking who honours it.
Is wrapped Bitcoin the same as Bitcoin?
It tracks the price and is redeemable for it, but it is a token on another chain backed by Bitcoin held elsewhere. Its value depends on that backing being real and accessible.
Last updated October 17, 2026