On Monday, Binance announced the launch of Wrapped XRP (wXRP) in one of its boldest steps towards improving cross-chain functionality and interoperability yet.
“Binance has completed the wXRP integration and has opened deposits for wXRP on Ethereum (ERC20). Please find your assigned XRP deposit addresses on Ethereum Network (ERC20) within the Deposit Crypto page.” The announcement reads.
The exchange however noted that while wXRP will be open for deposits, withdrawals on the Ethereum Network (ERC20) were restricted until a later date to be announced. wXRP deposits would hover be credited and traded as XRP.
Enter Cross-chain Functionality
Wrapping entails pegging a cryptocurrency token to the value of another token.
“It’s called a wrapped token because the original asset is put in a wrapper, a kind of digital vault that allows the wrapped version to be created on another blockchain.”
This in essence means that wrapped XRP can be used on other blockchains such as Ethereum ERC20, Binance Chain, smart contracts, and DeFi, other than its native ledger enabling users to transfer, stake, and exchange wXRP with DApps and wallets on the host network
The wrapped XRP does not lose its original value and just like USDC is tied to the dollar to the ratio of 1:1, so is XRP to wXRP meaning that XRP’s price movements are mirrored to those of wXRP.
Wrapping XRP has been a year-long journey with the initial announcement being made in late October 2021. The process entailed a collaboration between cross-chain developer firm wrapped.com and Hex Trust.
With an increased demand for cross-chain functionality and the growth of DeFi, users are increasingly looking for ways to circumvent limitations facing the usage of one non-native asset on a blockchain, leading to the emergence of wrapped tokens.
And while this is a huge milestone for XRP users, some also see it as a stepping stone towards XRP being relisted on Coinbase, Robinhood, and most trading platforms once its legal standoff with the SEC is finalized.
“Wrapped $XRP ( $WXRP) is going to be how XRP initially gets relisted on exchanges first,” tweets one XRP proponent. According to him, Binance listing wXRP is a pointer at what is to come. “With Binance completing their integration, how long do you think it is until Coinbase lists? Technically they’re not selling XRP. Can’t wait for clarity next.” He continues.
With the SEC increasingly losing its battle to Ripple, Binance’s move is also seen as an open defiance to the regulator’s “unfounded claims” while keeping the cryptocurrency afloat until the matter is done and dusted. At press time, XRP continues to radiate strength with price consolidating in the $0.7545 area.