WETH Explained: What It Is, How It Works, and Why It Matters in Crypto

When you hear WETH, Wrapped Ether is Ethereum converted into an ERC-20 token so it can interact with DeFi protocols. Also known as Wrapped Ether, it’s not a new coin—it’s just Ethereum dressed up to work where ETH can’t. Think of it like swapping a dollar bill for a gift card: same value, but only usable in certain stores. ETH itself isn’t an ERC-20 token, so it can’t be used directly in most DeFi apps, DEXs, or lending platforms. That’s where WETH comes in—it’s the bridge.

Every time you trade ETH for a token like UNI or AAVE on a decentralized exchange, you’re likely using WETH behind the scenes. The system automatically wraps your ETH into WETH, executes the trade, then unwraps it back to ETH if you need it. This process happens instantly and without extra cost beyond gas fees. You don’t need to manually wrap it unless you’re interacting with a smart contract that only accepts ERC-20 tokens. Platforms like Uniswap, SushiSwap, and Aave all rely on WETH to function smoothly. Without it, Ethereum’s entire DeFi ecosystem would grind to a halt.

WETH isn’t just a technical workaround—it’s the glue holding together thousands of DeFi protocols. It enables lending, staking, liquidity mining, and automated trading. When you see a yield farm offering 15% APY for depositing ETH, it’s almost always WETH you’re actually depositing. The same goes for NFT marketplaces like OpenSea, where you need WETH to bid on assets. It’s also used in cross-chain bridges and layer-2 solutions to move value efficiently. Even though it’s just a wrapped version of ETH, its role is massive.

Some people worry WETH is riskier than ETH, but it’s not. It’s 1:1 backed by ETH, and the wrapping contract is open-source, audited, and used by millions daily. The only risk? If you accidentally send ETH to a contract that only accepts WETH, you’ll lose it. That’s why it’s smart to always check what format a platform requires before sending funds.

Below, you’ll find real-world examples of how WETH fits into crypto—whether it’s powering DeFi trades, enabling NFT purchases, or being used in failed projects that confused users with fake airdrops. No fluff. Just what matters.