Crypto

Crypto Twitter calls for calm after wETH insolvency joke goes viral

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Wrapped Ethereum (wETH) ‘insolvency’ joke over the weekend forced influencers to explain it was just a ‘shitpost’ after community members reported it taken for real.

The wETH Insolvency FUD (Fear, Uncertainty and Doubt) apparently started making the rounds on November 26, with false rumors alleging that wETH is not backed 1:1 by Ether (ETH) and is insolvent.

Blockchain developer and contributor to the ERC-721A token standard “cygaar” was one of the first to spread the joke, before confirming in a later post that it was actually a “shitpost”. to see who was reading its content.

In fact, only a day before, cygaar tweeted that “WETH can never become insolvent” and that “WETH will always be exchangeable 1:1 with ETH”.

Ethereum bull and The Daily Gwei host Anthony Sassano also took part in the wETH joke with his own parody post on Nov. 27, but later had to clarify that the original post was “shitpost/meme” after reading the replies.

Gnosis co-founder Martin Köppelmann was another to join in on the joke, saying in a Nov. 27 Tweet to his 38,800 Twitter followers that wETH is no longer fully backed by ETH and that “we might see a bank run on redeeming WETH soon.”

Hours later, he said he hoped the joke “wouldn’t cause too much confusion,” linking to a thread that explained the joke for those unaware.

Related: What is Wrapped Ethereum (wETH) and how does it work?

Speaking to Cointelegraph, Markus Thielen, the head of research at crypto financial services platform Matrixport also confirmed that there is little to no truth to WETH’s ‘shitposts’.

The logic of wETH is automated by smart contracts and is not controlled by a centralized entity, he explained:

“I’m not too concerned about WETH as it is a smart contract and not stored by a centralized exchange. Since the smart contract is open source, it can be checked for bugs or defects.

On the other hand, the recent FUD against Wrapped Bitcoin (wBTC) might be justified, Thielen said, referring to rumors that FTX could have printed 100,000 wBTC from scratch, as FTX’s November 11 bankruptcy filing shows no BTC in FTX’s balance sheet.

“The WBTC is completely different and here the concerns are valid,” Thielen explained.

wETH is a wrapped version of ETH that is pegged at a 1:1 ratio, which aims to solve interoperability issues on Ethereum compatible blockchains by allowing ERC-20 tokens to be traded more easily.

wETH was introduced as an ERC-20 token on the Ethereum network for this reason, as ETH follows different rules and therefore cannot be traded directly with ERC-20 tokens.

Despite the light-hearted humor behind the jokes, “Dankrad Feist” suggested to its 15,500 Twitter followers in a Nov. 27 Tweet that the comments should be marked “more clearly as jokes” because it “may not be obvious to people.” strangers”.

WETH is currently priced at $1,196, at a current ratio of 0.999:1 for ETH, according to data from Coinmarketcap.