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.
It’s really a test to see who has read my content.
— cygar (@0xCygaar) November 26, 2022
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.
Reading the answers I feel like I should clarify
This is a shitpost/meme – there is nothing wrong with WETH and you can always exchange 1 ETH for 1 WETH
Although if you don’t believe me I will buy all your WETH right now for 0.3 ETH
sell me anything you want
So fuck you
— sassal.eth (@sassal0x) November 27, 2022
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.
I hope this joke didn’t cause too much confusion. If you need more context, find it here:https://t.co/KDN3NvdO2z
— Martin Köppelmann (@koeppelmann) November 27, 2022
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”.
A lot of people make jokes about WETH.
Be aware that it may not be obvious to outsiders that this is completely different from bridged assets and there is literally almost zero risk. I think it would be better to mark them more clearly as jokes.
— Dankrad Feist (@dankrad) November 27, 2022