Crypto Twitter calls for calm after wETH insolvency joke goes viral

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An inside joke about the “insol­ven­cy” of Wrapped Ethereum (wETH) over the week­end has forced influ­encers to explain it was just a “shit­post” after mem­bers of the com­mu­ni­ty took it as real. 

The wETH insol­ven­cy FUD (fear, uncer­tain­ty and doubt) seem­ing­ly began to make the rounds on Nov. 26, with false rumors alleg­ing that wETH isn’t 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 sub­se­quent post that it was in fact a “shit­post” to see who was read­ing his content. 

In fact, only a day before, cygaar tweet­ed that “WETH can­not ever go insol­vent” and that “WETH will always be swap­pable 1:1 with ETH.”

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

Gno­sis co-founder Mar­tin Köp­pel­mann was anoth­er one to get in on the joke, claim­ing 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 “did not cause too much con­fu­sion,” link­ing to a thread that explained the joke for those who weren’t in the know. 

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 has also con­firmed that there is lit­tle to no truth to the WETH “shit­posts.”

wETH’s log­ic is auto­mat­ed by smart con­tracts and it isn’t con­trolled by a cen­tral­ized enti­ty, he explained: 

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

On the oth­er hand, recent FUD against Wrapped Bit­coin (wBTC) could be war­rant­ed, said Thie­len, refer­ring to rumors that FTX may have print­ed 100,000 wBTC out of thin air, as FTX’s Nov. 11 bank­rupt­cy fil­ing does not show any BTC on FTX’s bal­ance sheet.

“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 for ERC-20 tokens to be exchanged more easily.

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

Despite the light­heart­ed humor behind the jokes, “Dankrad Feist” sug­gest­ed to his 15,500 Twit­ter fol­low­ers in a Nov. 27 Tweet that the com­ments should be marked “more clear­ly as jokes” as it “may not be obvi­ous to outsiders.” 

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



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