What is a wrapped token?
A wrapped token is a token on one network that represents an asset held or controlled elsewhere. Its value depends on the redemption mechanism.
Version 1
GlossaryA wrapped token is a token on one network that represents an asset held or controlled somewhere else.
For a simple example, one bitcoin is deposited into a system and a matching token is issued on another blockchain. Applications on the second chain can use the token, while the original bitcoin remains under the system’s custody or control rules.
A little more technical
The system usually mints the representation when it accepts the underlying asset, then burns the representation when the asset is released. Users depend on the contracts, signers, guardians and redemption rules keeping the issued amount aligned with the assets backing it.
Common misunderstanding
The wrapped token is not the original asset moving onto another chain. It is a claim or representation whose safety depends on how deposits and redemptions are controlled.
Hashi calls its Sui-side Bitcoin representation hBTC. Source: Sui Foundation’s Hashi description.