You can use waxed paper, but there are a few things to keep in mind.
First of all, the wax coating on the paper won’t melt down into the compost. This is good. The wax itself will melt down into the compost, but it won’t harm the bin. The problem comes when the paper melts. If you place a piece of waxed paper on top of the compost bin while it’s heating up, the heat from the heating element will melt the paper.
This means that the paper will begin to emit gases and odors which will eventually have to be vented outside. The compost won’t smell. It just will have some odors emanating from it. The paper is not a barrier to composting. It doesn’t stop anything.