The Wrap Protocol from Bender Labs is Launching: Here’s What You Need to Know
By: Hugo Renaudin
Tags: Ethereum, Blockchain, Tezos, Cryptocurrency, Defi

The Wrap Protocol from Bender Labs is Launching: Here’s What You Need to Know Hugo Renaudin Follow Apr 22 · 4 min read

Wrap Protocol is launching on Monday April 26th, 2021. Here’s everything you need to know about it.

What is Wrap Protocol?

Wrap is a decentralized bridge between Ethereum and Tezos. Through Wrap, users can transfer their Ethereum ERC20 and ERC721 tokens to the Tezos blockchain in a decentralized way.

Through Wrap, users issue wTokens (wrapped tokens) which are representations of ERC20 and ERC721 tokens on the Tezos blockchain. wTokens can then be used on the Tezos blockchain, and their value is pegged to the original tokens. Wrap is a decentralized protocol, relying on a strong federation (the Signers Quorum) that guarantees the stability of the protocol, and a community of $WRAP governance token holders.

A simple example (without taking fees into account):

Joe has 100 DAI on Ethereum as an ERC20 token

Joe sends his 100 DAI to Wrap Protocol and requests to wrap them

After 1 hour, Joe can request Wrap Protocol to send 100 wDAI to his Tezos address. wDAI is an FA2 token which is pegged to DAI.

Joe can now use his wDAI on Tezos

Wrap Protocol Launch

How to interact with Wrap

Wrap Protocol will launch on Monday April 26th, 2021 on both the Tezos and Ethereum mainnets.

The Wrap dApp will be accessible here, and more information on Wrap is available on:

At launch, users will be able to wrap ERC20 tokens from the Ethereum blockchain to FA2 tokens on the Tezos blockchain. Once wrapped, these tokens will be compatible and usable with most DeFi protocols on the Tezos blockchain, such as Quipuswap, Atomex or Kolibri.

Asset supported at launch

The list of ERC20 available for wrapping at launch is the following:

AAVE, BUSD, CEL,COMP, CRO, DAI, FTT, HT, HUSD, LEO, LINK, MATIC, MKR, OKB, PAX, SUSHI, UNI, USDC, USDT, WBTC, WETH

More ERC20 will be added to this list — if you’d like to request the addition of a token, please reach out on our Discourse.

Signers Quorum

At the center of Wrap Protocol is the Signer’s Quorum, a group of entities which work together to guarantee the stability of the peg between wrapped token and their ERC20 counterparts.

The original Quorum is made of 5 signers, with a 3 of 5 governance. The founding signers are:

Wrapping and Unwrapping Time

At launch, wrapping and unwrapping time will both be set at ~1 hour. This means that once users have requested a Wrapping or Unwrapping transaction on the dApp, the protocol will take 1 hour to release tokens to the user’s address.

Users will be able to see their pending wrap/unwrap transaction on the Wrap dApp.

$WRAP Token distribution

$WRAP will be issued at launch as an ERC20 then wrapped into an FA2 using Wrap Protocol.

Per our whitepaper, $WRAP will be distributed weekly to:

Users — 40%

Signers — 50%

Dev Pool — 10%

The first batch of $WRAPs will be distributed to users and signers 1 month after the launch of Wrap Protocol. Going forward, $WRAPs will be distributed weekly to users and signers based on their activity one month prior.

Weekly Distributions of $WRAPs follow an exponentially decreasing curve as seen below. More information on the number of $WRAPs distributed per week can be found here.

Users will earn $WRAP based on their wrapping activity. $WRAPs corresponding to one week of activity will be distributed 1 month later.

Below is a table of the $WRAP allocation between the different wrapped assets.

This means that twice as much $WRAPs will be distributed to users who wrap UNI, USDC, USDT, WBTC, WETH and LINK than users who wrap the other tokens. This distribution is susceptible to change.

$WRAP Liquidity and Dev Pool $WRAP allocation

Exceptionally, and for the first month of operation, $WRAPs allocated to the Dev Pool will be distributed to Bender Labs on the first day of each week. During this period, the Dev Pool allocation will be exclusively used for liquidity provision on AMMs. One month after launch, there will be a period of adjustment to synchronize $WRAP distributions between the Dev Pool and users and signers.

As a result, there will be a WRAP/XTZ pool on Quipuswap on the day of the launch with liquidity provisioned by Bender Labs.

What to expect in the next few weeks

We’re going to release major functionalities of Wrap Protocol in the next few weeks. We’ll also start $WRAP distribution one month after launch. A primer on what to expect:

Stats Page on tzwrap.com to monitor wrapping activity user by user

$WRAP tokens distribution one month after launch

$WRAP staking contract release and wrapping fee distribution

ERC721 integration with Wrap Protocol

Integration of $WRAP with BaseDAO for on-chain governance

More information

If you have any questions, sign up for our webinar on the Wrap Protocol launch on April 28th, 2021, 1pm EST.

You can also join our Telegram and ask questions on our Discourse.

Happy wrapping!

Hugo for the Bender Labs team