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Jokes about wrapped ETH depeg cause brief panic on Twitter

Jokes about wrapped ETH depeg cause brief panic on Twitter


Crypto influencers started a joke about wrapped Ethereum (WETH) losing its peg and becoming insolvent over the weekend, causing a brief panic within the community.

The joke started on Nov. 26 when blockchain developer Cygaar tweeted that WETH was about to become insolvent and that they would bail out anyone at a rate of 0.5 ETH for one WETH.

Other popular Ethereum advocates also joined in on the joke. Anthony Sassano, popularly known as sassal.eth, tweeted that someone he trusts told him that WETH would collapse. He, therefore, advised anyone exposed to be concerned.

Gnosis founder Martin Koeppelmann said the constant burning of ETH means that WETH is no longer fully backed, and there might be a bank run soon.

Ethereum co-founder Vitalik Buterin joined in the joke, saying WETH and WEF sounded alike.

At the same time, Tron founder Justin Sun joked that he and Buterin would invest $2 billion into WEF to recover lost funds.

Meanwhile, they soon clarified that they were joking, adding that WETH was as strong as ever and could not be affected by a bank run.

WETH is under no threat

A Nov. 27 Twitter thread from Ethereum developer Hudson Jameson explained the joke and why it was funny to the Ethereum community. According to him, WETH is a smart contract that accepts ETH in exchange for WETH, which is an ERC-20 token.

Since WETH operates through a smart contract, its price does not deviate from ETH, and a centralized exchange or group does not store it. This means a bank run can’t happen. He said:

“The WETH jokes today play on the fact that WETH is an ERC-20 token that is impossible to go insolvent (besides an unlikely contract flaw) and will always be backed 1-to-1 by the ether deposited by you.”

Did the WETH joke cause FUD?

While the crypto community joked about the WETH peg, Ethereum’s price fell by over 4% during the weekend, according to CryptoSlate data.

According to Richard Heart, jokes about WETH depegging from ETH “could get the silliest of users rekt .”

Mainstream publication Bloomberg News also reported that some analysts had raised concerns over wrapped Ether. According to the newswire, the concerns were raised from jokes on Twitter that falsely claimed wrapped Ether’s value depegged from Ether.

Dankrad Feist highlighted that outsiders not aware of the workings of ETH would not realize that “there is literally almost zero risk.” As such, he advised that such tweets should be clearly marked as jokes.

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Compiled by Metacrunch. Metacrunch is a news complier and aggregator platform which aims to spread awareness and updates on Metaverse, Web 3.0 Technology, Blockchain, Cryptocurrency, NFTs, Airdrops and many more.

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