What Is WETH (Wrapped Ether)?

Because ETH existed before the ERC-20 standard, it lacks the functions this standard provides, such as transfer and spending approval (approve). This means ETH must be handled separately in smart contracts designed to work only with ERC-20 tokens. The WETH contract solves the problem in a simple way: the user sends ETH to the contract and receives the same amount of WETH; when they give the WETH back to the contract, they withdraw their ETH. These operations are called wrapping and unwrapping.

WETH is widely used in trading pairs on decentralized exchanges such as Uniswap, as collateral in lending protocols and for placing bids in NFT marketplaces. Because each WETH is backed by one ETH locked in the contract, its value is equal to ETH. The widely used WETH contract has no admin key; therefore it requires no trust in a custodian institution, and the risk is limited to the contract code itself.

One point to note is that tokens bearing the name WETH on different networks are not the same thing. WETH on a Layer 2 network or one moved across a bridge depends on the security of that network or bridge. To avoid fake WETH contracts, the official contract address should be verified.