Token Compatibility Development Tutorials, Guides & Insights
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ETH vs WETH: Understanding the Difference and Their Roles in Ethereum
- Decentralized Exchanges (DEXs): Many decentralized exchanges (like Uniswap) require ERC-20 tokens for trading. WETH allows ETH holders to trade ETH just like any other ERC-20 token.
- DeFi Lending Platforms: Platforms such as Aave or Compound often require collateral in the form of ERC-20 tokens, making WETH essential for ETH holders who want to participate.
- Token Swaps: WETH allows for seamless token swaps between ETH and other ERC-20 tokens on platforms that support such swaps.
ETH and WETH serve different but complementary roles in the Ethereum ecosystem. While ETH is the native currency used to power the network, WETH enables ETH to interact with the growing number of decentralized applications and DeFi protocols that rely on the ERC-20 standard. By understanding how to wrap and unwrap ETH, you can effectively engage in the broader Ethereum DeFi ecosystem without leaving the native ETH environment.