Wrap & Unwrap
Overview
Wrap & Unwrap refers to the process of converting a specific token into its wrapped version, or converting the wrapped token back into its original form. In Swapscanner’s case, Wrap & Unwrap is a service that allows users to wrap GCKLAY into wGCKLAY, or unwrap wGCKLAY back into GCKLAY.
Why should GCKLAY be wrapped?
GCKLAY accrues interest in real-time, which results in an increasing balance. Additionally, since it can be exchanged 1:1 with KLAY (hereafter referred to as KAIA) through the unstaking process, it is easy to track the amount of KAIA you effectively own.
However, due to the characteristic of real-time balance growth, providing GCKLAY liquidity to a typical DEX pool is challenging. It is also difficult to create and manage a pool using GCKLAY as a pair.
To address this issue, wGCKLAY was introduced. Since the balance of wGCKLAY is fixed, it allows you to create and operate pools using wGCKLAY as a pair. Moreover, when you unwrap wGCKLAY, you will receive the equivalent amount of GCKLAY, including all the accrued interest during the holding period.
How to Use Wrap & Unwrap
The process is very simple. Just enter the amount you want to Wrap or Unwrap, and proceed with the transaction.
One important thing to note is that GCKLAY and wGCKLAY are not exchanged at a 1:1 ratio. This is because wGCKLAY, with its fixed supply, must represent the growing balance of GCKLAY, which increases over time. As the amount of GCKLAY increases, the value of wGCKLAY must also rise accordingly. Therefore, the value of wGCKLAY continuously increases, meaning the exchange rate will deviate more from 1:1 over time.
Let me explain with a simple example:
You wrap 10 GCKLAY and receive 10 wGCKLAY. At this point, the exchange rate is 1 GCKLAY = 1 wGCKLAY.
After some time, the interest accrual causes the balance of GCKLAY to increase to 11, but the wGCKLAY balance remains at 10. The exchange rate then becomes 1 GCKLAY = 0.91 wGCKLAY, meaning the value of each wGCKLAY has increased.
If even more time passes and the GCKLAY balance grows to 12, the wGCKLAY balance remains at 10, and the new exchange rate is 1 GCKLAY = 0.83 wGCKLAY.
In summary, while the exchange rate will move away from 1:1 as time goes on, don’t worry! The interest accrued during the time you held wGCKLAY will be fully reflected when you unwrap it, and you’ll receive the corresponding amount of GCKLAY.
You can also obtain wGCKLAY through swaps.
Just like GCKLAY, wGCKLAY is also integrated with the Navigator, allowing you to easily obtain it or swap it for other tokens.
Is wGCKLAY safe?
The Wrap & Unwrap service has undergone a security audit by HAECHI LABS, a company known for conducting audits for various major projects. No issues were found during the audit.
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