What is wNEAR? A Full Guide to Wrapping NEAR!
It is commonly known that most blockchains cannot interact with one another. Several methods can be utilized to solve this issue of the lack of interoperability — allowing blockchains to be compatible with each other. Wrapped tokens are one of them.
wNEAR is the wrapped version of NEAR. wNEAR lets NEAR be used on non-native blockchains. MyNearWallet allows users to seamlessly create their wNEAR in just a few clicks.
Wrapped tokens — what are they?
What are wrapped tokens?
A wrapped token is a type of digital asset which is tied to another cryptocurrency. The value of a wrapped token is pegged to the value of its underlying coin. Usually, wrapped tokens represent assets that exist on other blockchains.
To create a wrapped token, an equal amount of the original cryptocurrency must be placed in a digital vault, a so-called “wrapper.” To unwrap this cryptocurrency, the wrapped tokens need to be burnt (meaning: removing from circulation forever, by, for example, sending them to a non-usable wallet).
Examples of wrapped tokens
Currently, many types of wrapped tokens are available on the market. The most notable examples of wrapped tokens are wrapped Bitcoin and wrapped Ether. The wBTC token allows users to use Bitcoin in the Ethereum ecosystem.
NEAR crypto also has its wrapped version called wNEAR.
What problem do they solve?
Wrapped tokens primarily solve the problem of interoperability meaning that they can bring networks together.
Imagine if we could not send money from one bank to another. This would be extremely inconvenient and would require us to get a new credit card each time we used a different bank. A similar situation exists in the crypto market. The absence of interoperability is stopping blockchain technology from mass adoption.
Wrapped tokens provide an opportunity to overcome this limitation. They connect blockchains and let cryptocurrencies move beyond their own networks. Wrapped tokens can help users to address different issues of native networks. For instance, the wrapped Bitcoin allows investors to take advantage of the lower gas fees and faster transaction times of the Ethereum blockchain.
How to use wrapped tokens?
Since wrapped tokens increase blockchain interoperability between different networks, they are usually used in decentralized finance. Wrapped tokens unlock new streams of liquidity (measure showing if an asset can be quickly and easily bought or sold), which drive investment tools across various networks.
So, if you have some wrapped tokens, you may consider trying out some DeFi projects.
wNEAR — overview
What is wNEAR?
wNEAR is a wrapped version of NEAR. One wNEAR token is equivalent to one NEAR token. So, to mint or generate one wNEAR, you will need to place one NEAR in a digital vault.
wNEAR is a fungible token — meaning it’s divisible and not unique. It wraps the native NEAR token in order to be compatible with any contract/factory that accepts fungible tokens. As with any other wrapped token, wNEAR can operate on other blockchains.
Specifically, wNEAR is deployed on the Aurora network. Aurora is an Ethereum Virtual Machine created by the team at the NEAR Protocol. Aurora uses ERC-20 tokens in its ecosystem. Thus, wNEAR enables users to interact with the apps which exist on the Ethereum network.
You can always buy/sell wNEAR at the rate of 1 wNear = 1 Near on MyNearWallet.
What are wNEAR standards?
The wNEAR contract implements the new fungible token standard defined in 3 individual standards:
- NEP-146 — for core fungible token API
- NEP-145 — for storage manager per account
- NEP-148 — for fungible token specific metadata
If you want to learn more about wNEAR, check out the source code for the wrapped NEAR. Additionally, you can watch the video with an in-depth analysis of the source code.
What are wNear use cases?
Exchanges, trading pairs
There are many use cases for wNEAR, especially in the sphere of DeFi. wNEAR is a necessary asset for investors who utilize certain exchanges. For instance, in the case of Ref Finance, users cannot directly swap Near to USDC. The exchange simply does not offer this trading pair.
But what they can — is swap wNEAR and get all kinds of stablecoins.
So, this is a way to get other crypto when swapping NEAR: you will first need to turn your NEAR into wNEAR. Once you have wNEAR you will be able to convert it to USDC.
Similarly, in some scenarios, NEAR can come in a wrapped form when bridged from any other chain. In this case, a bridge is a means of communication between blockchains that allows to transfer info and assets between them.
This means that sometimes users will not be able to rely on the original version of NEAR only.
Liquidity Pools, Yield Farming
Other notable use cases for wNEAR include liquidity pools and yield farming. Liquidity pools are a way for decentralized exchanges to gain liquidity. Such pools accumulate tokens from different liquidity providers. In exchange for putting their coins into a smart contract, users can earn rewards.
wNEAR also can be used as a yield farming crypto. Yield farming is a form of a liquidity pool. For instance, AuroraSwap incentivizes investors to act as liquidity providers and stake their digital asset pairs. This allows AuroraSwap to accrue the required liquidity for transactions.
Interacting with smart contracts
Apart from liquidity pools, there are many other types of smart contracts compatible with wNEAR. Smart contracts can serve a plethora of purposes. They facilitate financial operations such as lending, trading, investing, and borrowing. wNEAR can expand the possibilities of investors when it comes to decentralized finance. Besides, the list of smart contract use cases for wNEAR is constantly growing.
How to wrap NEAR in MyNearWallet?
You can wrap your NEAR token in different ways. Yet, the method offered by MyNearWallet is among the easiest ones. Follow these steps to wrap your NEAR:
1. Go to MyNearWallet’s official website.
2. Enter your MyNearWallet account.
3 Click the “Swap” button.
4. Select $wNEAR and swap your NEAR token.
Bear in mind that on MyNearWallet, you can always wrap/unwrap your tokens at the rate of 1 wNEAR = 1 NEAR.
How to unwrap wNEAR in MyNearWallet?
MyNearWallet also enables users to unwrap their tokens. Follow these steps to unwrap your wNEAR:
1. Enter your account.
2. Click the “Swap” button.
3. Press the switch icon to adjust the swap from wNEAR to NEAR. Unwrap your tokens.
Conclusion
wNEAR is a wrapped token that unlocks many DeFi opportunities for investors. MyNearWallet lets you wrap your NEAR tokens and unwrap your wNEAR effortlessly and without fail.
LEARN more!
Your Vocab for this Article
- Interoperability: allowing blockchains to be compatible with each other
- Burning crypto: permanently removing a number of tokens from circulation
- Liquidity: measure showing if an asset can be quickly and easily bought or sold
- Minting: when users generate a new token via mining or staking
- Fungible tokens: divisible and non-unique
- Bridge: a means of communication between blockchains that allows to transfer info and assets between them.
- Yield: rewards you get from staking or other processes
