It’s a vital piece of the Hedera ecosystem that allows for Hedera HBAR holders to fully utilise dApps developed on the Hedera Smart Contract Service.
HBAR is Hedera Hashgraph’s native currency and as such can be used freely across the Hedera Services. However, it does not conform to the standard that EVM dApps normally use.
ERC-20 is the fungible token standard used on EVM networks. It defines what a token is, how they are transferred and adds additional properties such as approving someone else to spend your tokens. It is the most widely used standard within Web3 dApps.
Since HBAR is a native currency built on the Hedera Hashgraph prior to the existence of ERC-20, it does not support the standard. This is where wHBAR comes into play!
Wrapping allows us to use native currencies that would otherwise be unsupported within a dApp. Here’s how it works:
wHBAR is an ERC-20 token that can be issued when HBARs are provided. Every wHBAR is issued 1:1 with the amount of HBARs deposited. ERC-20 HBAR representation enables the usage of HBAR throughout Hedera SCS dApps.