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Ethereum

WETH COMPLETELY INSOLVENT?!

Updated: Jul 30, 2024
Published: Nov 28, 2022
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NO.

 
The crypto world is jumpy right now. We get it. But honestly, this is one of the most ridiculous rumours we’ve heard this year.
 
What was a joke appears to have got its claws into the mainstream media (sign, when will they learn) and FUD is spreading.
 

But why not?

 
WETH is a smart contract, it accepts ETH, giving back WETH (wrapped ETH). ETH doesn’t have the same properties as an ERC-20 token, so wrapping allows easier trading on platforms like UniSwap and LooksRare.
 
The smart contract is not controlled by a centralised party, it is open sourced and regularly audited by experts. WETH CANNOT go insolvent (unless the smart contract fails) as it is backed 1 for 1 by the ETH customers deposited.
 

Ha, Gotcha.

 
It was a joke. WETH is not de-pegging or insolvent. In fact, that is, in the traditional sense, impossible. The smart contract holds your ETH when you wrap it, and gives it back when you unwrap it. Creative accounting, de-pegging and insolvency are only possible if the smart contract has been breached. It has not.
 
It’s incredible that the joke has caught traction with some of the most popular publications in the world (looking at you Bloomberg). Honestly, they need to start hiring better analysts, this is becoming a regular thing.

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