Growing concerns began circulating on November 26th regarding Wrapped Ethereum (WETH) being freed into ETH. Some speculated that WETH was not backed 1:1 by ETH, giving rise to fears of insolvency. Ethereum developers and influencers stepped in to conclude the situation, calling it FUD.
Recent price corrections triggered by the collapse of FTX exacerbated fear and uncertainty in the already rocky cryptocurrency industry. Speculation can inject further anxiety, as is the case here.
An alleged prank regarding the insolvency of Wrapped Ethereum was making the rounds over the weekend. Blockchain and ERC-721A developer ‘cygaar’ took to Twitter on November 27th to make claims that WETH would soon be insolvent:
After this Ethereum bull and Daily Gwei host Anthony Sassano jumped in, states:
“A person I have known for more than ten years, whom I consider reliable, is convinced that WETH will depeg and experience a total collapse. I don’t know anything concrete, but if I was exposed, I would be concerned.”
ETH influencers say to keep calm
Despite the speculation that ran amok after these comments were made, many advocates and ETH influencers ignored the concerns. In a subsequent post, cygaar confirmed that it was a “sh*tpost” to see who read his content.
They later added in a series of threads that “WETH can never go insolvent” and “WETH will always be exchangeable 1:1 with ETH.”
Meanwhile, Sassano also referred to his initial posts as “sh*tpost/ meme” after reading the responses.
He even continued apologize to society to inject fear:
“I sincerely apologize for my WETH sh*tpost, I honestly thought it was harmless and that people weren’t going to take it seriously (my bad for thinking this). Will do better in the future.”
Rumors vs. facts
Wrapped Ethereum is a smart contract that accepts ETH and returns an ERC-20 token called “WETH”, a wrapped version of ETH pegged at a 1:1 ratio. It aims to solve interoperability issues on Ethereum-compatible blockchains by allowing ERC-20 tokens to be exchanged more easily.
In terms of valuation, WETH currently stands at $1,174.69 at a ratio of 0.999:1 to ETH after seeing a decrease of 3.71% in the last 24 hours.
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