What is OpenSea Polygon WETH – Wrapped ETH Explained

An increasing number of new phrases and acronyms are exploding across NFT platforms.

A new phrase to find its way on OpenSea, and the NFT and crypto industries, is Polygon WETH.

Those who are familiar with cryptocurrencies and have a beyond average knowledge of NFT buying may know that Polygon is a cryptocurrency used for trading and buying NFTs, but what is Polygon WETH?

Polygon WETH means Polygon Wrapped Ethereum. This process involves wrapping the more widely used cryptocurrency Ethereum around the less costly and faster Polygon. This enables holders of Ethereum to use their cryptocurrency in different, faster, and cheaper ways not possible before.

Ethereum by far is one of the most expensive cryptocurrencies and blockchains on the market, and gas fees often venture into the hundreds of dollars per transaction.

It is also one of the slower networks with a limited number of miners validating requests using the Stake of Work method.

By wrapping Polygon around Ethereum, it allows Ethereum to be used on the Polygon blockchain where transactions are considerably faster, and fees much cheaper.

Explanation of Polygon WETH

A good analogy of wrapping one cryptocurrency around another is by comparing it with a deep sea diver.

A person can stand in the fresh air, and explore the world, but until they wrap themselves in a deep sea diving outfit, and put on an air tank, they can’t explore the depths of the ocean.

In this case the person would be the Ethereum, and the deep sea diving suit would be the Polygon.

By wrapping the Ethereum up in Polygon, it means the Ethereum can now take to the ocean and have experiences impossible beforehand.

And continuing the analogy we can conclude that the Ethereum Blockchain is the air, and the Polygon Blockchain is the sea.

Each blockchain offers different experiences, and each cryptocurrency can only work within its own blockchain.

This presents a challenge as more networks appear.

There are developers working on an interoperable solution that can see different cryptocurrencies being used on different blockchain networks without needing to be tied to just one or having to wrap one currency around another.

Why Wrap Cryptocurrency

We have already covered the reason why wrapping one cryptocurrency around another exists, but what hasn’t been answered yet is why people choose to wrap a cryptocurrency rather than simply trade it to a different cryptocurrency.

So, for example, why would someone not just trade their Ethereum to Polygon to carry out whatever it is they want to do?

One such reason are the fees of trade.

There are fees for almost every action on the blockchain. Buying, selling, trading, wrapping etc… but it could be most cost effective to wrap an existing cryptocurrency in another rather than trading from one to another, and then trading back against after.

The second, and probably most important reason, is volatility.

People often choose cryptocurrencies for a reason. Whether they resonate with the blockchains long term future plan, or they believe the cryptocurrency has investment potential, many traders are usually all in on one cryptocurrency.

They may also see other cryptocurrency as a riskier investment.

The benefit of wrapping means the value of the original cryptocurrency remains the same.

So, if someone wrapped Ethereum into Polygon WETH, the value of the token remains pegged (the same) as Ethereum. It does not become a Polygon token using the Polygon rate.

It also means if Polygon took a nose-dive in value, and lost a lot of market capital, the Polygon WETH can still be converted back in to Ethereum at the same volume it was converted from.

This is an added advantage and may feel like a safety net for holders.

The Future of OpenSea Wrapping of ETH

OpenSea are a huge business now worth billions of dollars.

It is in their interest to support a wide range of users as much as possible and not alienate an element of the market simply because they do not hold Ethereum or want to pay the extremely high Ethereum network gas fees.

In the early stages of the marketplace, they traded in, and accepted, Ethereum only.

As of today, this has been extended to Polygon, Polygon WETH and recently Solana.

It is of no surprise OpenSea have chosen these three cryptocurrencies to allow trade in considering these three cryptocurrencies are now used for 99% of all NFT sales.

Ethereum started losing ground to Solana and Polygon.

Partly due to the environmental concerns seen often in the media due to the excessive energy used to validate Ethereum blockchain transactions, but also due to the eye watering gas fees.

Ethereum works on a Proof of Work concept which means miners solve complex calculations on huge energy guzzling servers to complete the transaction. Often demand outweighs supply and fees rise.

It isn’t uncommon to find gas fees higher than the purchase price of the NFT!

On the other hand, both Solana and Polygon are not only considerably faster networks – which itself increases demand the supply of miners are not utilised for blocks of time solving calculations – but they use the Proof of Stake concept.

This concept is much better for the environment and has proven to be considerably cheaper.

As a comparison typical gas fees on the Ethereum network for buying an NFT can easily cost $150 whereas on Solana or Polygon this can be a 1 to 2 cents!

Ethereum is moving to Proof of Stake, which is being called Ethereum 2.0.

This will have a better environmental impact as will no longer require miners, but the cost impact is still to be discovered. Ethereum has a dominance that may see demand high enough to continue to see high prices.

As demand increases for other currencies, there is an interoperable initiative being built on the blockchains allowing cryptocurrencies to be interchangeable across different networks.

Although this may not directly reduce Ethereum fees, if it means people could easily use their Ethereum on a Solana blockchain to mint, NFT developers may move towards creating Solana and Polygon smart contracts and mint and trade there instead.

The only two barriers to entry to this so far has been the sheer dominance of Ethereum and OpenSea in the market, and also the added complexity of wrapping cryptocurrencies in an industry that is already incredibly complicated.

Changes will happen, it will just be when, not if!

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