ETH vs WETH — what is Wrapped Ethereum (WETH)?
The difference between ETH and WETH (wrapped ETH) is a common topic of confusion between liquidity providers and traders when interacting with DeFi protocols.
Ether (ETH) is the native token or currency of the Ethereum blockchain. It is used to pay for gas, or transaction fees, when interacting or executing contracts on Ethereum.
In the early days, many projects started launching their own tokens with their own functions. In order to create an ecosystem of tokens where they can interact with each other, the ERC-20 token standard was established in 2015 to set rules and regulations as the blueprint for tokens on Ethereum.
For example, the ERC-20 standard defined certain mandatory rules for every token contract such as totalSupply, balanceOf, transfer, transferFrom, approve and allowance.
The ERC-20 standard not only allowed for interoperability between tokens, but also a set of standards that would be useful for exchange listings and transferring tokens from one user to another.
Without the ERC-20 standard established, developers would not be able to easily integrate other tokens into their projects without knowing how to call the functions in the token contract.
Examples of ERC-20 tokens are all over the place, such as Sushiswap’s SUSHI token, mStable’s MTA token or Balancer’s BAL token.
