Token Wrapper

Definition ∞ A token wrapper is a smart contract mechanism that enables a cryptocurrency from one blockchain to be represented and utilized on a different, incompatible blockchain network. This process typically involves locking the original asset on its native chain and subsequently issuing an equivalent “wrapped” version on the target chain. The wrapped token maintains a 1:1 value peg to its underlying asset. It facilitates cross-chain functionality and liquidity.
Context ∞ Token wrappers are a frequent subject in cryptocurrency news, particularly concerning their role in enhancing interoperability and liquidity across diverse blockchain ecosystems. Reports often examine the security protocols of various wrapping solutions and their impact on the functionality of decentralized finance applications. These mechanisms are crucial for expanding the utility of digital assets and connecting otherwise isolated blockchain environments.