Wrapped Monero is making it to the cryptocurrency space at a point in time when some of the exchanges are delisting and cracking down on privacy coins.
Privacy coins cryptocurrencies which allow the users to gain total anonymity while making the blockchain transactions. The user identity and the origins of their transactions are completely protected.
Wrapped cryptocurrencies on the Ethereum network are ERC-20 tokens which represents the wrapped token on the Ethereum Network. Proof of reserve is the strength of the Wrapped tokens. The numbers of tokens that are wrapped are completely backed in reserves,
An ERC-20 token which represents Monero (XMR) is now launched in the Ethereum network by BTSE. The ticker symbol for Wrapped Monero is WXMR. The focus of this token is to bring in more liquidity in to the DeFi Ecosystem. WXMR is completely backed by XMR at a ratio of 1:1 and it is secured by BTSE.
Several stable coins have had trouble being transparent about the reserve back up for their pegged assets; however, wrapped tokens are able to ensure and prove their reserves.
BTSE is a cryptocurrency exchange which combines all fiat, crypto, and stablecoin pairs in one order book. BTSE will have custody of the WXMR.
This move brings in the possibility of adding WXMR to decentralized exchanges (DEXes) like Uniswap and 1inch.
Monero (XMR) on Exchanges Delisting and After Effects
It is important to recollect that BitTrex announced their delisting of Monero (XMR), Zcash (ZEC) and dash (DASH).
The coming of WXMR is an exciting move because several exchanges who delisted privacy coins will now be able to consider these coins in listing in a wrapped format as the wrapped tokens are traceable.
Riccardo Spagni tweeted: “Hey @BittrexExchange @BittrexGlobal @BittrexUS are you going to list wXMR? It’s traceable, so you should have no problem listing it.”
When some of the users who were concerned about the whole purpose of privacy coins getting defeated this way expressed their concern.
Riccardo Spagni tweeted: “How so? You can go wXMR -> XMR and it’s indistinguishable from buying XMR directly through a KYC’d exchange. You get all the benefits of using XMR from that point on.”
So, the Privacy coin is now wrapped in Traceability to Sustain Privacy.
Some of the XMR fans are not happy about such explanations and they are wondering if they are giving up their privacy features. Ethereum is a very transparent network, the numbers of WXMR being moved across is going to be visible and therefore the privacy element is still a question.