BTSE, a crypto custodian firm, recently launched a particular ERC-20 token capable of representing the privacy-centric token, Monero (XMR), within the Ethereum blockchain. This token will be referred to as Wrapped Monero, which then goes by the WXMR ticker symbol. The newly-launched asset is set to have a 1:1 ratio with Monero under BTSE security.
Jonathan Leong, the founder of BTSE, states that the new product has the potential to unlock the true potential value of XMR even further. He adds that users no longer have to sell their XMR holdings in order to purchase ERC-20 tokens; they may now simply wrap it, use it on Ethereum, and then swap them right back to Monero if they do so wish.
As appealing as that may sound to their users and investors, such benefits come with an underlying and equally concerning downside – primarily on the token’s well-established privacy properties. Wrapped Monero users will only have the degree or amount of privacy the network can provide due to it being an ERC-20 token. This means that the outstanding privacy features of Monero would be foregone in replace of it being used within the Ethereum network.
Going by how the wrapped representation of Bitcoin (wBTC) is doing right now, however, sacrificing a bit of privacy may sound not all that bad for Monero. Using wBTC as an indication, Monero could benefit a lot from the launching of WXMR, as it enables its users to participate and potentially capitalize on the DeFi market – which the industry is currently into head-over-heels.