Wrapped Token
A token on one blockchain that represents an equivalent asset from another blockchain or a non-tokenized asset, typically backed 1:1 by the original asset held in a custodial or smart contract vault. Wrapped tokens enable assets to be used in ecosystems they weren't originally designed for, expanding DeFi composability across chains.
“Wrapped Bitcoin (WBTC) is an ERC-20 token on Ethereum backed 1:1 by actual Bitcoin held in custody. This allows Bitcoin holders to use their BTC as collateral in Ethereum DeFi protocols like Aave.”
Cross-Chain
Referring to the ability to transfer assets, data, or messages between different blockchain networks. Cross-chain technology is essential for blockchain interoperability, allowing ecosystems like Ethereum, Solana, and Cosmos to communicate. Solutions include bridges, relay chains, and messaging protocols like Wormhole and LayerZero.
Bridge
A protocol that enables the transfer of assets and data between two different blockchains that cannot natively communicate with each other. Bridges typically lock assets on the source chain and mint equivalent wrapped tokens on the destination chain. They are critical infrastructure for multi-chain ecosystems but have been the target of major exploits due to their complexity.
ERC-20
The most widely adopted token standard on Ethereum, defining a common set of rules that all fungible tokens must follow. ERC-20 specifies six mandatory functions (like transfer, approve, and balanceOf) that ensure any compliant token can be seamlessly used across wallets, exchanges, and DeFi protocols without custom integration.
DeFi (Decentralized Finance)
An ecosystem of financial services built on blockchain networks that operate without traditional intermediaries like banks, brokerages, or insurance companies. DeFi uses smart contracts to provide lending, borrowing, trading, insurance, derivatives, and yield generation in a permissionless, transparent, and composable manner. Anyone with a wallet can participate.