Need wrapped crypto explained simply? You found it here. Blockchains are independent, decentralized networks. That means they can’t communicate with one another “out of the box”. That is beginning to change through bridges and other interoperability routes.
When one cryptocurrency is locked up with the price pegged to its original, it can be represented on another chain. It is said to be “wrapped” and is represented with a “w” in front, such as WBTC. The Synthetix network uses “s” in front of theirs
The wrapped token lives on its new chain, mainly for trading purposes. They can also be used for lending and borrowing too. The price of the wrapped crypto is tracked and applied, usually through an oracle.
Wrapped cryptocurrencies and assets are similar to stablecoins, except stables represent country currencies (fiat). Those have to be locked up too. These types of crypto are emerging for interoperability, which is the big buzz word for blockchains working together.
I feel that in the future, wrapped crypto and stablecoins will be needed less. Protocols keep emerging for fast swaps. Cross-chain bridge projects are also exploding in number. I see all this leading to a future where rapid interchange between coins, tokens, tokenized assets, and stablecoins is normal. We will choose whatever we want for payments and the swap happens immediately.