WXCH brings greater liquidity to the Ethereum ecosystem including decentralized exchanges (DEXs) and financial applications. Today, the majority of trading volume takes place on centralized exchanges with XCH. WXCH changes that, bringing Chia token’s liquidity to DEXs and making it possible to use XCH for token trades.
WXCH standardizes XCH to the ERC20 format, creating smart contracts for Chia. This makes iteasier to write smart contracts that integrate Chia tokens transfers.
Maintaining various nodes and managing transaction types in order to support multiple currencies can be onerous. Now exchanges, wallets, and payment apps only need to handle an Ethereum node.
How it works
To receive WXCH, a user requests tokens from a broker. The broker then performs the required KYC / AML procedures and verifies the user’s identity. Once this is completed, the user and broker execute their swap, with XCH from the user transferring to the broker, and WXCH from the broker transferring to the user.
Minting refers to the process of creating new wrapped tokens. Minting in the wrapped framework is initiated by a broker and performed by a custodian.
Burning is the action of redeeming XCH for WXCH tokens, and only broker addresses can do this. The amount to be ‘burnt’ is deducted from the broker’s WXCH balance (on chain) and the supply of WX is then reduced.