Wrapped Ethereum (wETH) “went bankrupt” over the weekend because of an inside joke. People in the community thought it was real, so influencers had to explain that it was just a “shitpost.”
Fear, uncertainty, and doubt (FUD) about WET’s insolvency began to spread on November 26. The rumour said that wETH isn’t backed 1:1 by Ether (ETH) and is bankrupt because of this.
“cygaar,” a blockchain developer and contributor to the ERC-721A token standard, was one of the first people to spread the joke. He later wrote that it was a “shitpost” to see who was reading his content.
Related: Binance will contribute $1 billion to the crypto recovery effort.
In fact, Cygaar had just tweeted the day before that “WETH will never go bankrupt” and that “WETH will always be able to be swapped for ETH at a 1:1 ratio.”
Anthony Sassano, the host of The Daily Gwei and an Ethereum bull, also made a joke about wETH on November 27 with a parody post. After reading the replies, he had to say that the first post was a “shitpost/meme,” though.
Martin Koppelmann, the co-founder of Gnosis, also joined in the joke. On November 27, he sent a Tweet to his 38,800 followers saying 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 “didn’t cause too much confusion” and linked to a thread that explained the joke to people who didn’t get it.
Markus Thielen, the head of research at the crypto financial services platform Matrixport, told Cointelegraph that the WETH “shitposts” are mostly false.
He explained that smart contracts automate the logic of wETH and that it is not run by a single entity.
“I’m not too worried about WETH because it’s a smart contract and isn’t kept by a central exchange.” Since the source code for the smart contract is public, it can be checked for bugs or other problems.
Thielen, on the other hand, believes that recent rumours about Wrapped Bitcoin (wBTC) are true.He was referring to rumours that FTX created 100,000 wBTC out of thin air, given that FTX’s bankruptcy filing on November 11 shows no BTC on its balance sheet.
“WBTC is very different, and the worries are real here,” Thielen said.
wETH is a wrapped version of ETH that is based on a 1:1 ratio. Its goal is to make it easier for ERC-20 tokens to be traded on Ethereum-compatible blockchains, which can cause problems with interoperability.
This is why wETH was made an ERC-20 token on the Ethereum network. ETH has different rules, so it can’t be traded directly with ERC-20 tokens.
Even though the jokes were meant to be funny in a lighthearted way, “Dankrad Feist” said in a tweet on November 27 that the comments should be marked “more clearly as jokes” because it “may not be obvious to outsiders.”
Related: A cryptocurrency wallet linked to the Mt. Gox breach has lost 10,000 BTC.
According to data from Coinmarketcap, the price of one wETH is $1,196, and it costs 0.999 ETH to buy one ETH.