Wrapped Assets: Tokenized Stocks, Synthetic Tokens & DeFi Basics

When working with wrapped assets, crypto tokens that represent another underlying asset, letting it move on a blockchain the original asset can’t access directly. Also known as tokenized assets, they let you trade, lend, or use the value of something like a stock, gold, or another cryptocurrency without holding the physical item.

Another key player is tokenized stocks, digital versions of equities that are backed 1:1 by real shares and live on a smart‑contract platform. They give you the same exposure as buying shares on a traditional exchange, but with blockchain benefits like instant settlement and programmable finance. Then there are synthetic tokens, derivatives minted on‑chain that mirror the price of assets such as commodities, indices, or even other cryptocurrencies. Both tokenized stocks and synthetic tokens rely on collateral pools and oracle feeds to stay pegged to their real‑world counterparts, and they power many DeFi use cases—from lending and borrowing to yield farming.

Why Wrapped Assets Matter for DeFi Users

Wrapped assets require smart‑contract custody, which means a trusted code layer locks the original asset and issues the blockchain version. This process creates a clear subject‑predicate‑object relationship: wrapped assets → are issued by → smart contracts. The availability of wrapped assets enables DeFi protocols to accept otherwise unsupported collateral, boosting liquidity across chains. For example, a Bitcoin‑wrapped token (WBTC) lets Bitcoin holders earn interest on platforms that only accept ERC‑20 tokens. Similarly, a tokenized Walmart stock (WMTon) lets you add equity exposure to a liquidity pool on Ethereum, opening new arbitrage and hedging opportunities.

However, using wrapped assets also brings risks. The peg can break if the underlying collateral isn’t properly audited or if the oracle provides bad data. That’s why many projects use over‑collateralization—locking more value than the token represents—to cushion price swings. Users should check the security audits of the wrapping contract, the reputation of the custodial entity, and the transparency of the collateral reserves before committing capital.

In practice, wrapped assets act as a bridge between traditional finance and decentralized finance. They connect real‑world assets to on‑chain markets, expand the range of instruments you can trade, and increase the efficiency of cross‑border transactions. Below you’ll find a curated list of articles that dive deeper into specific wrapped assets, from tokenized stocks like Walmart’s WMTon to synthetic tokens used in high‑yield strategies, plus safety tips and market analysis to help you make informed decisions.