As a decentralized bridge between Ethereum and Tezos, users can transfer Ethereum ERC20 and ERC721 tokens to the Tezos blockchain. Users wrap these tokens to FA2 tokens on Tezos, and their value is pegged to the original tokens. The tokens are then compatible with most decentralized finance (DeFi) protocols on the Tezos blockchain, such as Quipuswap, Atomex, or Kolibri.
At launch, the time it takes to wrap a token will be approximately one hour. Unwrapping will take the same amount of time. Once a user requests a Wrapping or Unwrapping transaction on the dApp, the protocol will take one hour to release tokens to the user’s address. Users can see their pending wrap/unwrap transaction on the Wrap dApp. Wrapping and unwrapping fees are 0.15%.
The issuance of the Native $WRAP tokens took place concurrently with the launch as ERC20 tokens wrapped into an FA2 using Wrap Protocol. The first batch of $WRAPs will be distributed a month after the launch of Wrap Protocol.
According to the whitepaper, 40% of weekly $WRAP tokens will be distributed weekly to users. Then, signers receive another 50%. Finally, the dev pool will receive the last 10%. Eventually, $WRAPs will be distributed weekly to users and signers based on their activity one month prior. The weekly distributions of $WRAPs will follow an exponentially decreasing curve, totaling in 100 million coins.
As a decentralized protocol, Wrap relies on a strong federation of users and developers that is set to guarantee its stability. Accordingly, this strong federation will consist of the Signer’s Quorum. They are a group of entities working together to guarantee the stability of the peg between wrapped tokens and their ERC20 counterparts. The founding signers are Bender Labs, MadFish, Bake N Rolls, Baking Bad, and Blockscale. The Quorum will operate with a three of five governance.