What is a Wrapped Token?

Blockchains such as Bitcoin and Atrium have different protocols and functions, and due to fundamental differences in their algorithms, they can not interact with each other. Although this separation and independence has maintained the sovereignty and security of these blockchains, the existence of an interactive ecosystem in which data can be easily exchanged is an undeniable need and fundamental issue for these blockchains.

Some newer blockchains, such as Polkadat Valley, have been developed to address the problem of interoperability; But we still need a solution to connect the larger and older networks, such as Bitcoin and Atrium. This is also the purpose of making Wrapped Tokens.

In this article, we are going to review rapid tokens and their uses and introduce their types to know what these specific tokens are and what they do. So stay with us until the end of the article.

What is a Wrapped Token?

Rapid Token is a digital currency whose value is linked to digital currency or other major physical assets such as gold and stocks and real estate. These tokens have been created for the purpose of being able to be used in defa platforms. The main asset within the digital storage space becomes complex or so-called “rapid” and a new token for exchange on other platforms is created.

Rapid tokens allow the use of non-native assets in blockchains and the creation of bridges or interfaces between networks and interoperability in the digital currency space. These tokens can represent anything; Including works of art and collectibles, commodities, digital assets, stocks, securities, Fiat currencies and real estate. Because Rapid tokens are linked to another asset, they must be under the management of a custodial institution that rapes the assets. In other words, it is the institutions that establish or abolish the link between tokens and assets.

Wrapped Bitcoin, abbreviated wBTC, was the first Bitcoin Rapid Token to be used through smart contracts in the Atrium blockchain. Bitcoin Rapid is not the only Rapid token available, and there are other Rapid tokens that mostly include assets compliant with the Atrium ERC-20 standard and China BEP-20 Binance Smart.

It is interesting to note that although ERC-20 tokens are built on the Atrium platform, they are not compatible with Ether because they were developed before them. So ether, like bitcoin, must be raped to be compatible with other ERC-20 tokens; For this reason, a tokenized version of Ether has been created on the Atrium platform. Other blockchains, such as Cardano, Polkadat, and Solana, are testing Raped tokens to facilitate access to Diffy applications.

Newer projects in this field include bLuna. bLuna is actually a rap version of the Luna token belonging to the Terra network, which can be traded freely or used as collateral in Terra protocols. Tera is a Chinese blockchain platform that uses stable coins to create a decentralized global payment system.

Types of Rapid Tokens

Now that we understand what Rapid tokens are used for, we can point out the types of tokens and get acquainted with them. Types of Rapid tokens are:

• Cash-settled Rapid Tokens: Tokens that do not have the ability to become their base asset.
• Redeemable Rapid Tokens: Tokens that allow investors to exchange Rapid tokens for a fixed asset.
• Rapid NFTs: Not all NFT tokens are subject to the same standard. Each NFT defines its own API or stand-alone programming interface that is used to generate and send tokens and display metadata. The most common standard for NFT is the ERC-721 standard, which was first used by the popular CryptoKitties game and has since become a template for future projects. Rapid NFTs allow users to interact with each other or collateral on other platforms.

How does a Rapid Token work?

At the request of exchanges such as Airswap, CoinList, AAVE, Zerox (0x) and Maker, the custodian generates a certain amount of Rapid tokens on a specific platform such as Atrium. In a similar process, when a Rapid token needs to be converted into a core asset or coin such as Bitcoin, the user will ask the custodian to release the token from storage. Simply put, for every wBTC available, there is a unit of the underlying asset (such as Bitcoin) held by the custodian.

However, the process of making and managing Rapid tokens in the digital currency space has one major problem, and that is that the custodial institution must be trusted to hold funds. This trust and maintenance of assets by intermediaries or third parties runs counter to the ideals of a free and decentralized ecosystem. Nevertheless, the existence of this intermediary is an essential need; Because traders can not use Rapid tokens alone for mid-chain transactions. However, technology is evolving rapidly and we may see decentralized options for doing so in the near future.

Bitcoin Rapid; The most famous example of Rapad tokens

The first Bitcoin Rapid Protocol launched in January’s 1919. The protocol was developed with the aim of combining the capability and liquidity of bitcoin with the flexibility of ERC-20 tokens and using it in the Atrium network.

While Bitcoin itself cannot be used in Diffie transactions, Bitcoin Rapid can replace the main asset and be used in the Diffie ecosystem or any other decentralized application on the Atrium network.

With the growth of Defy, which has now poured billions of dollars into lending, options and derivatives, such a token was necessary. The demand for using Bitcoin in Defai as a base asset was so high that it seemed practically necessary to do so.

Bitcoin rapidity is a very important phenomenon in the world of digital currencies. The price of this token is equal to the original bitcoin; But its practical aspect is more prominent and increases the possibility of using bitcoin for other purposes such as defa.

Simply put, someone who owns a bitcoin can lend their bitcoin and receive a fixed annual interest rate by connecting their wallet to a decentralized platform through smart contracts.

The borrower can also use his digital currency as collateral so that in case of inability to repay the loan, the collateral will be automatically deposited in the lender’s wallet.

Lenders can make a profit by using this type of financing, even in declining markets where the value of assets is declining.

Frequently Asked Questions

Rapid tokens are emerging assets and not much information is available yet. Hence, there may be many unanswered questions about these assets. In the following, we will ask and answer three important questions about Rapid tokens.

Conclusion

In this article, we have tried to examine Rapid tokens and their types and applications. By studying this article, you will find that Rapid tokens are very important to increase the interoperability of different blockchains. With Rapid tokens, certain assets or coins can be used on other platforms and restrictions can be removed. Although there are new blockchains built with interoperability, important and widely used networks such as Bitcoin and Atrium do not take advantage of this feature and require new solutions such as Rapid Token.

Bitcoin Rapid was one of the first examples of Rapid tokens that could revolutionize the industry. Bitcoin Rapid made it possible for Bitcoin to enter other platforms and be used for financing, lending and many other purposes. All in all, Rapid tokens are spreading rapidly, and members of the digital currency community need to pay special attention to them.