19 Dec, 2025
2 minutes
There are two tokens in the Ethereum network that new crypto users as well as professional crypto traders should not confuse with each other: ETH vs WETH. They may look identical, but they are applied for different purposes related to smart contracts, decentralized apps, or DeFi software. The proper understanding of the difference between WETH and ETH is a vital piece of information for anyone who decides to work with decentralized exchanges, liquidity pools, or NFTs, or with complex Ethereum software.
At an abstract level, ETH is basically the native cryptocurrency of the Ethereum blockchain, while WETH, acronymic for Wrapped Ether, is a token representation of ETH that adheres to the ERC-20 standard in terms of its tokens. But the question is, why the need to create two representations of the same asset on the Ethereum blockchain in the first place, that of ETH vs WETH? Furthermore, what does WETH essentially consist of in relation to ETH, and when should WETH be preferred over ETH?
This article guides you through all that you want to know about what WETH is and does, all the way from what it is all about to the differences between ETH and WETH. You will be very clear about your role within and on the Ethereum market.
Ethereum (ETH) is the cryptocurrency and the official currency of the Ethereum blockchain network that is one of the most widely used blockchain networks globally. It was established in the year 2015 and etched its mark within the boundaries of the blockchain technology world by making possible "smart contracts," which are self-executable once a set of specified conditions are met.
There are numerous applications of Ether in the Ethereum environment:
Gas fees: The ETH is used for payment of fees in the process of executing transactions and smart contracts.
Store of Value: ETH is considered to be a store of value, just like Bitcoins.
Medium of exchange: ETH serves as a medium of exchange within DeFi platforms for purposes of borrowing, staking, trading, and collateral
Network Security: In 2022, Ethereum transitioned from Proof of Work (PoW) to Proof of Stake (PoS), and ETH tokens are being used for staking.
In the comparison between WETH vs ETH, it should also be noted that ETH itself is the native currency on the Ethereum platform, but it has limitations in terms of how it is constructed, and that is what the Wrapped ETH aims to rectify.
Ethereum (ETH) is a cryptocurrency and the native token of the Ethereum platform, this platform is amongst the most used worldwide. Ethereum came into existence in the year 2015 and made way for self-executing contracts called smart contracts to become a reality, these contracts execute automatically when the required conditions are met. With Ethereum, everything from dApps to NFTs became possible.
ETH has several roles in the Ethereum environment:
Gas fees: These are fees that are charged in ETH and are used in execution of smart contracts.
Store of value: Some investors consider ETH a store of value, similar to BTC.
Means of exchange: ETH is a means of exchange in lending, staking, trading, and collateral markets.
Cybersecurity: Ethereum has transitioned from Proof of Work in 2022 to Proof of Stake and thus requires ETH for staking.
While evaluating the difference between WETH and ETH, it is important to understand and realize the fact that ETH in its own is the native digital currency of the Ethereum network and that the inherent form of its structure has some disadvantages, and that is what WETH aims to rectify.
The awareness of the distinctions associated with ETH and WETH is necessary since both have unique yet equally important roles to play in the Ethereum network. Although both have practically the same value, their usage patterns differ when it comes to DeFi applications and liquidity pools. Some of the key points that define the existence of the distinctions associated with wrapped ETH vs ETH are mentioned below:
ETH is the cryptocurrency that denotes the money of the blockchain system of the Ethereum network. This is mainly for the payment of gas and for the validation of transactions on the network.
Instead, WETH represents Wrap Ether, which essentially stands for ETH wrapped in the form of an ERC-20 token. This makes it possible to utilize it in much the same way as almost every other asset on the Ethereum network.
The reason for this is that ETH is not an ERC-20 token, hence, it cannot relate or connect with the smart contract in the ERC-20 protocol.
All the decentralized finance platforms operate on the basis of ERC-20 tokens.
The ETH cannot always be exchanged or combined without being converted.
WETH is also mandated to standardize tokens in liquidity pools, stake offerings, as well as yield farms.
ETH tokens can be converted into WETH or vice versa in a 1:1 manner using smart contracts.
WETH is more or less a tokened form of ETH.
This makes WETH flexible and easy to use when combined with multiple protocols.
ETH is held on the Ethereum network itself.
WETH is a wrapping of ETH using a Smart Contract, where the ETH gets locked, and an equivalent amount of WETH is received.
The Ethereum platform is a robust and adaptable blockchain technology platform. Hovewer, its cryptocurrency, ETH, did not support and complied with the ERC-20 token standard at the time of its inception. This created a technical problem wherein ETH could not be fully integrated and function seamlessly with dApp applications, smart contracts, and DeFi applications that use, for the most part, the ERC-20 token standard.
In other words, in a move to solve this problem, what was required in the ecosystem was an ETH which functioned in exactly the same way as any other ERC-20 token, which is now called Wrapped ETH (WETH).
One of the prominent things about the DeFi world is the existence and functioning of ERC-20 tokens. However, the fact is that ETH does not follow this protocol, which means there is no direct way to handle ETH and ERC-20 tokens in the same space unless coded separately. This is overcome by WETH, which converts ETH into a usable asset that can work in the space of ERC-20 tokens.
Predictability in token behaviors is a requirement for smart contracts. As there are technical properties for ETH, which are not the same as those of ERC-20 tokens, functions requiring both ETH and ERC-20 tokens cannot be performed by smart contracts.
WETH enables the smooth interaction of ETH with these systems.
A DEX like Uniswap should have a liquidity pool with a minimum of twoERC-20 tokens.
The fact that ETH is not an ERC-20 token makes it impossible to directly work with other cryptocurrencies in pools.
It enables the ETH functionality to allow the owners of ETH to participate in liquidity provision, trading, and market-making.
There are many solutions at layer two, bridge solutions, and scaling solutions that leverage the wrapped assets.
WETH ensures that ETH works on the following platforms:
Roll-ups
Sidechains
Bridges
Multi-chain DeFi protocols
WETH assists in simplifying the development process through the easier management of tokens.
Instead, they could choose to treat the WETH in the same manner in which they treat every other ERC-20 token, perhaps reducing the error occurrences through dAPPS.
To better understand the mechanics that distinguish wrapped ETH vs ETH, it is essential to analyze how WETH works. Since ETH is established on top of the Ethereum blockchain, the essential element of WETH is that it is an ERC-20 token that essentially takes the place of ETH because of the same value and full reserves.
In this scenario, the user locks the ETH by locking it within the smart contract. The moment this happens, a new quantity of WETH is issued in a proportional manner in a 1:1 ratio as a consequence of this contract.
There is 1 ETH behind each and every WETH-Token.
The value of WETH is fixed and unbiased compared to ETH
The ETH will stay in the smart contract until the time the user wishes to swap the WETH vs ETH again.
This means it could be easily integrated into decentralized applications and other platforms such as smart contracts, and also into a liquidity pool if the functionality of ETH is not applicable.
Therefore, the use of WETH includes:
Noncentralized trading exchange
Enabling liquidity provision for Automated Market Makers (AMMs)
Interacting With DeFi Protocols That Use ERC-20 Tokens
It is important to examine the pros and cons of ETH vs WETH if one is involved within the Ethereum system, especially those who are participating on decentralized applications and NFT marketplaces. Even though there are two different assets that handle Ether in different capacities, each one has its uses and limitations. Below are the pros and cons of WETH concerning ETH.
1. Native asset of the Ethereum blockchain. The ETH is used for fuel purposes, securing the network, as well as performing transactions. The ETH acts as the basis for the Ethereum network.
2. Universal Acceptance. Every wallet, exchange, and smart contract has access to ETH, making it the most flexible asset on the network.
"If there is a lesson to be gleaned from the world of technology, it is certainly this: simplicity is"
3. No Wrapping Required. The ETH can be transferred immediately without any kind of conversion.
1. ERC-20 full compatibility. WETH is a token that is an ERC-20-compliant token and hence plays an essential role in DeFi applications and operations involving smart contracts and decentralized exchange services.
2. Improved Interoper. Since WETH vs ETH fixes the issue of incompatibility of addresses, WETH has perfectly harmonized with lending market platforms, staking platforms, and AMMs like Uniswap.
3. Efficient Trading Liquidity. A liquidity pool requires an ERC-20 token, and as such, WETH serves an important role in providing this liquidity and enabling easy trading.
1. In ERC-20 In. Since ETH is not an ERC-20 token, ETH cannot be used directly for any operations in the context of DeFi interfaces. The process of utilizing ETH, therefore, involves a conversion to WETH.
2. Less efficient for DeFi automation. "Smart contracts could implement standardized token formats, and the ETH design could limit interactions between programs. "
1. It involves wrapping and unwrapping. The conversion process also introduces new steps and associated gas costs.
2. Smart contract risk. It is secured by a smart contract. Although it is highly trustworthy, there are some risks that a smart contract can undergo, despite the minimal chances.
3. Not Usable for Network Fees. Although you own WETH, in order to pay gas costs, you will still have to own ETH because WETH is not going to replace ETH even on a protocol level.
Wrapped Ether, which is also referred to as WETH, plays a very crucial role in the world of Ethereum and DeFi as well. Even though ETH is the primary payment method for gas fees in the network, it lacks the capability to perform certain operations, which is overcome by WETH.
The first and most prominent application of WETH is in decentralized exchanges, Uniswap, SushiSwap, or Balancer. These decentralized exchanges are based on ERC-20 tokens in pair trading. The ETH coin does not contain any of the properties of an ERC-20 token, thus, for it to be applied in pair trading and liquidity pools, it has to be wrapped in WETH.
The Liquidity Providers (LPs) will from time to time pair the WETH with additional tokens like USDC, DAI, or/or governance tokens.
WETH offers:
Standardized Token Format
Standard
A Stable Interaction with Smart Contracts
Enhanced capital efficiency for AMM liquidity pools
Almost all NFT marketplaces, including OpenSea, find WETH more preferable for:
Placing bids
Accepting Offers
Compatibility between contracts
There are various DeFi applications requiring the use of WETH asset.
Borrowing & Lending (Aave, Compound
Staking and Yield Farming
Collateralized Positions
In Layer 2 networks and bridge networks, WETH is a standardized unit of a token, which is more easily transferrable than ETH.
Converting ETH to WETH and vice versa is a regular procedure within the Ethereum platform, especially for persons dealing with decentralized applications. Conversion is easy as WETH is fully collateralized by ETH on a 1:1 basis, which means that you can choose to wrap and unwrap your funds when you want.
By wrapping ETH, it means locking your ETH in a smart contract in exchange for an equivalent amount of "Wrapped ETH" or "WETH." This is done because many decentralized platforms support only ERC-20 tokens, of which WETH is an example.
The overall procedure has the following steps:
Select a suitable wallet or platform that supports wrapping. This has to be a Web3 wallet or a decentralized application.
Check "Wrap ETH" or a similar option.
Now, type in the ETH you wish to exchange.
Confirm the transaction, which will transfer your ETH to the wrapping contract.
You get your WETH in a 1:1 ratio in your wallet.
"Unwrapping" is essentially the opposite of wrapping and will result in your WETH being sent back to the contract and being "unlocked" as ETH.
The steps are similar:
Tap on the "Unwrap" option on your wallet/platform.
Please enter the amount of WETH to convert.
Approve the transaction, and that will send your Ether back.
The cryptocurrency in your wallet will change from WETH to ETH.
As there is direct interaction with a smart contract involved in wrapping and unwrapping, and not trading, there's:
No price difference (all ways 1:1
No slippage
No volatility risk during conversions.
"ETH and WETH always have the same price at all times, and the process of converting from ETH to WETH is more of a utility action than a trade."
Wrapped ETH or WETH is extensively used in the Ethereum network, and for normal users, it could be termed as a very safe method. In reality, like every other cryptocurrency and blockchain process, there are certain risks associated with WETH that users must be aware of while converting ETH into WETH.
The major risk posed by WETH lies in its smart contracts. WETH is not natively secure by the Ethereum platform like ETH but instead is secured by a contract governing the token. If a flaw were to exist within this contract, then potentially this could affect the safety of WETH. As much as the main contracts for WETH are battle-hardened and audited, not a single smart contract is flaw-free.
As its name suggests, WETH is essentially a "wrapped" version of ETH and therefore needs an interface that will lock their ETH and give them their WETH in exchange. Should this fail for whatever reason-a bug or mismanagement of this interface-there's a possibility that the link connecting ETH to WETH could fail too.
Though this is highly remote, it's something that users would do well to remember when making their comparison between the two regarding their levels of decentralization and trust.
Usually, people employ the use of WETH in decentralized Exchanges, lending platforms, and liquidity pools. However, these platforms also pose other risks, which include:
Liquidity problems
Exploits within the dApp's smart contract
Although the WETH itself may be safe, trading it on a vulnerable system may still result in losses.
The main point of difference between ETH and WETH the two is that the native currency of the Ethereum blockchain is ETH, whereas WETH is considered to be the wrapped version of ETH, which meets the ERC-20 standard specifications. This helps it to work efficiently along with most of the DeFi protocols, whereas the other one is not an ERC-20 standard-compliant digital currency.
In some cases, you may need a use of WETH, which can be in areas such as trading on decentralized exchanges, providing liquidity, DeFi, and even in smart contracts if you need the use of ERC-20 tokens. It creates compatibility on any base of Ethereum.
Yes. WETH can be unwrapped into ETH on a 1:1 basis at any given time. There is seamless conversion functionality for most wallets, Defi protocols, and exchanges.
Usually, this would be a resounding "yes," as WETH is considered a safe asset due to its full 1:1 backing by ETH and its reliance on simple smart contract functionality. However, one would do well not to forget about possible smart contract execution, platform, and phishing risks.
No. WETH does not influence the market value of ETH in any manner. This is because wrapped ETH is just the reflection of the value of ETH because it serves the same purpose.
