Ethereum Classic Labs Rolls Out Wrapped ETC (wETC); Opening Up The Decentralized Finance (DeFi) Market
Ethereum Classic has announced the launch of wrapped ETC (wETC) to act as a gateway to the Ethereum blockchain, which today is a major playing field of Decentralized Finance (DeFi) applications. The announcement, which came on Wednesday, means that ETC users will have seamless access to the DeFi ecosystem without converting their tokens.
Recent months have seen the DeFi space grow exponentially as more stakeholders bet on its long term value. Unsurprisingly, the trend is catching with other crypto projects, including BTC, which already found its way to DeFi through wrapped Bitcoin (WBTC). In fact, DeFi Pulse metrics show that WBTC is the second most locked asset in the $13.5 billion DeFi TVL.
ETC Joins the Ethereum DeFi Bandwagon
The recently released wETC is an ERC-20 token, hence compatible with the Ethereum blockchain and DeFi applications, ranging from DEXes, lending, and derivatives. Basically, ETC users will now be able to stake their tokens on Ethereum and leverage the varied DeFi services within the ecosystem. ETC Labs CEO and Co-founder James Wo said that the milestone would at least attract 10% of ETC holders,
“We wanted to make sure ETC could go to a different ecosystem and use different applications on top of that ecosystem … I expect at least 10% of ETC holders will want to participate and use wETC.”
Notably, Ethereum Classic emerged from the Ethereum 2016 hard fork, triggered by the DAO hack. It now appears that the two communities are ready to work together despite Wo’s stance that ETC will maintain a Proof-of-Work consensus as Ethereum shifts to a Proof-of-Stake mechanism,
“Not everyone trusts PoS. Some projects believe in PoW … So I think some of the ecosystems will probably stick to ETC or other PoW versions of a blockchain that can make smart contracts.”
The Token Wrapping Concept
As the blockchain and crypto industry evolves, interoperability solutions have been at the forefront of most innovations. The concept of wrapping tokens and using them on a different blockchain has changed the industry, especially with the growth of an ecosystem like Ethereum. Basically, this involves issuing a blockchain asset such as Bitcoin on a different blockchain-based on a 1:1 representation.
The wrapped crypto asset can then perform various functions given its compatibility with a particular blockchain ecosystem. In the wETC case, users will transfer their wrapped tokens to the Ethereum blockchain via chainbridge, an interface for both ecosystems. A similar amount will be minted for use within the Ethereum ecosystem, after which they will be destroyed when users convert their tokens back to ETC.