Wrapped tokens are blockchain tokens that represent another asset, while a native deposit sends the original asset on its own network. The difference affects what you hold, who or what must release it, and which network fees you need to pay.
A wrapped token is a claim recorded on another chain
A wrapped token is a token created to stand in for an asset that does not naturally exist in that token format or on that blockchain. For example, WETH is an Ethereum token designed to work with apps that accept ERC-20 tokens; ETH itself is Ethereum’s native asset and does not follow the ERC-20 standard.
In a common wrapping model, someone deposits the original asset into a contract or custody system, and an equivalent amount of tokens is issued on another chain. To get the original asset back, the holder must redeem or “unwrap” those tokens, which generally means the representation is destroyed and the original asset is released.
The token may aim to track the original asset one for one, but it is still a distinct asset with its own contract or issuer. Its practical reliability depends on how it is backed and whether the process for redeeming it works. A token called “wrapped” does not, by its name alone, tell you who controls the backing or how redemption is handled.
A native deposit moves the original asset on its own chain
A native deposit is a transfer of the asset in its original form on the blockchain where that asset exists. Sending BTC on Bitcoin or ETH on Ethereum does not create a new token representing BTC or ETH; the transaction moves the native asset according to that network’s rules.
For a cross-chain swap, native describes the asset being deposited and received, not necessarily who holds it during the swap. The user sends funds to a protocol-controlled vault or deposit address. The protocol’s validators secure those funds, and a separate accounting chain can coordinate the exchange and destination transfer.
In Chainflip’s design, the State Chain records swap information and coordinates activity while vaults hold assets on their original networks. The swap can therefore use native BTC and native ETH without first issuing a wrapped BTC token for use in an Ethereum pool. “Native” does not mean the deposit stays in your wallet or that no intermediary controls it while the swap is processed.
Four differences determine what you actually receive
Compare a wrapped representation and a native deposit on these four points before you choose how to move an asset:
- Asset identity: WETH is an ERC-20 token; ETH is Ethereum’s native asset. A wrapped BTC token on Ethereum is not the same asset as BTC held on Bitcoin.
- Redemption: A wrapped token may need to be redeemed through its contract, issuer, or bridge. A native deposit follows the protocol’s swap and payout process instead.
- Network fees: You generally need the source network’s fee asset to send a deposit: for example, BTC for a Bitcoin transaction or ETH for an Ethereum transaction. The destination transfer also incurs a cost on its own network.
- Where it can be used: An app may accept WETH because it handles ERC-20 tokens, even if it does not accept ETH directly. A native cross-chain swap is useful when your goal is to finish with the original asset on its own chain.
That last point is the practical test: check what the receiving wallet, exchange, or app expects. If it requires an ERC-20 token, native ETH may not meet the requirement until it is wrapped. If it requires BTC on Bitcoin, a token representing BTC on Ethereum is not a substitute.
A BTC-to-ETH example shows the full path
Suppose you have 0.1 BTC on Bitcoin and want ETH in an Ethereum wallet. With a native cross-chain swap, you begin by specifying the destination asset and address through the swap service. The protocol registers those details and provides a deposit destination associated with your swap; sending funds directly to an unrelated vault address can leave the network unable to identify what you intended.
You then send 0.1 BTC from your wallet, keeping enough BTC to cover the Bitcoin network fee. The transaction needs confirmation on Bitcoin. The protocol’s validators observe the deposit and record it on the State Chain, where the swap is coordinated against available liquidity. The delay before the protocol recognizes the deposit depends in part on the source network and its confirmation requirements.
After the exchange, the protocol arranges a transfer from its Ethereum vault to your specified address. You receive ETH on Ethereum, not a token that represents ETH. You still need ETH in your wallet for later Ethereum transactions, since ERC-20 tokens do not pay Ethereum gas fees.
There is one important edge case: sending the right asset to the wrong deposit destination, or sending it after the swap instructions have expired, may prevent the protocol from matching the payment to your intended trade. Check that the destination address and asset match the current instructions before sending, and keep the transaction record until the swap completes.
For a native BTC-to-ETH route, swap Bitcoin with Chainflip is one way to handle the cross-chain exchange. Choose a native deposit when you want the original asset delivered on its own network; choose a wrapped token when the destination app specifically needs that token format and you accept its redemption model.