Rising concerns began circulating on Nov. 26 regarding Wrapped Ethereum (WETH) becoming unpegged with ETH. Some speculated that WETH wasn’t backed 1:1 by ETH, which gave rise to insolvency fears. Ethereum developers and influencers stepped in to conclude the situation, calling it FUD.
Recent price corrections triggered by the collapse of FTX exacerbated fears and uncertainty within the already-rocky cryptocurrency industry. Speculation can inject further anxiety, as is the case here.
An alleged joke regarding the insolvency of Wrapped Ethereum was trending over the weekend. Blockchain and ERC-721A developer ‘cygaar’ took to Twitter on Nov. 27 to make claims that WETH would soon be insolvent:
Following this, Ethereum bull and Daily Gwei host Anthony Sassano jumped in, stating:
“A person I have known for more than ten years, who I consider trustworthy, is convinced that WETH will depeg and experience a total collapse. I don’t know anything concrete, but if I were exposed, I would be concerned.”
ETH influencers say to keep calm
Despite the speculation running amok after these comments were made, many proponents and ETH influencers disregarded the concerns. In a subsequent post, cygaar confirmed that it was a “sh*tpost” to see who was reading his content.
They later added in a series of threads that “WETH cannot ever go insolvent” and “WETH will always be swappable 1:1 with ETH.”
Fun fact: WETH cannot ever go insolvent. Your WETH will always be swappable 1:1 with ETH.
The code and logic is quite simple. In fact, it only takes 60 lines of code to implement.
Here's a simple primer on how WETH works
: pic.twitter.com/kUsfreCrT8
— cygaar (@0xCygaar) November 25, 2022
Meanwhile, Sassano also referred to his initial posts as “sh*tpost/ meme” after reading the replies.
Reading the replies I feel like I should clarify
This is a shitpost/meme – there is nothing wrong with WETH and you can always redeem 1 ETH for 1 WETH
Though if you don't believe me I'll buy all of your WETH right now for 0.3 ETH
Sell me all you want
Then go fuck off
— sassal.eth
(@sassal0x) November 27, 2022
He even went on to apologize to the community for injecting fear:
“I sincerely apologize for my WETH sh*tposting I honestly thought it was harmless and that people weren’t going to take it seriously (my bad for thinking this). Will do better in the future.”
Other influencers also added their narratives to offset uncertainties around the false rumors. Including Gnosis co-founder Martin Köppelmann and Dankrad Feist, a fellow ETH researcher.
Rumors vs. Facts
Wrapped Ethereum is a smart contract that accepts ETH and gives back an ERC-20 token called “WETH,” a wrapped version of ETH pegged at a 1:1 ratio. It aims to solve interoperability issues on Ethereum-compatible blockchains by allowing ERC-20 tokens to be exchanged more easily.
In terms of valuation, WETH currently stands at $1,174.69 at a ratio of 0.999:1 to ETH after witnessing a 3.71% decline in the last 24 hours.
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