WETH Decoupling FUD: Panic, Jokes, and Insecurity
Although the "originator" has long clarified that the WETH decoupling was a joke, the WETH FUD continues to ferment, reflecting to some extent the extreme lack of security in the current cryptocurrency market.Author: flowie, ChainCatcher
"How did WETH decouple? Did V God misappropriate ETH?"
This afternoon, a joke by Sun Yuchen on Twitter was taken seriously by many. It turns out that Sun Yuchen retweeted a post saying "WETH has decoupled" and claimed "I will invest 2 billion dollars with my BFF (Best Friend Forever, but everyone knows what their relationship really is) V God to fill the loophole in the WETH Foundation," which was quickly reported by several media outlets, sparking discussions and even panic in the community. The WETH Foundation (WEF) he mentioned is even a non-existent entity.
In fact, WETH has not decoupled and is almost impossible to decouple. According to data from platforms like Uniswap and Coinmarketcap, as of the time of writing, the price of WETH is $1,171, maintaining a 1:1 ratio with ETH.
And Sun Yuchen is not the first crypto KOL to joke about "WETH decoupling."
According to Cointelegraph, rumors about WETH decoupling began to spread on November 26. One of the "originators" was blockchain developer and contributor to the ERC-721A token standard, @cygaar.
He stated in a tweet: "WETH is about to become insolvent. To save this space, I will reluctantly rescue anyone holding WETH at a rate of 0.5 ETH per WETH. After the crisis is over, you can thank me."
Subsequently, many crypto KOLs, including members of the Ethereum community, joined in on the joke. Anthony Sassano, co-founder of EthHub, claimed that WETH is about to experience a "complete collapse."
Martin Köppelmann, co-founder of Gnosis, confidently stated in a tweet, "WETH is no longer fully backed by ETH; we may soon see a bank run due to WETH redemptions." Ethereum bull and host of The Daily Gwei, Anthony Sassano, spun a story claiming he received information from a long-time insider who "firmly believes WETH will decouple and experience a total collapse."
The more KOLs amplified the rumors, the greater the confusion, leading many to mistakenly believe it was true. Soon, the KOLs involved in the joke clarified in their tweets that it was all a prank.
@cygaar responded, saying that "WETH decoupling" was actually a "bullshit post," "to see who reads my content." Prior to this, @cygaar had also posted a related tweet stating, "WETH will never decouple; its code and logic are very simple. In fact, it can be implemented with just 60 lines of code."
To eliminate WETH FUD, perhaps we should first clarify some basic knowledge: What is WETH? Why is WETH almost impossible to decouple? This was also explained in detail in cygaar's long tweet, which ChainCatcher has compiled.
1. WETH is an ERC20 token. This means that the logic of WETH is built into a simple smart contract on the Ethereum blockchain. WETH is wrapped 1:1 with ETH, allowing users to use ETH more conveniently across various dApps.
- You can find the WETH token contract on the Ethereum Explorer, where you can note the balance mapping on line 32, which stores how much WETH each user has.
The core functions include: deposit, withdrawal, and transfer. The deposit function (line 38) is very simple. You receive WETH equal to the ETH you deposit. On line 39, the user's WETH balance increases, and the amount of ETH they can send in transactions also increases.
Withdrawal (line 42) is also very simple. The contract first ensures that your balance is less than or equal to the withdrawal amount. It then decreases the user's WETH balance and sends that amount of ETH back to the user.
TransferFrom (L63) is very similar. It first checks if the user has enough WETH to transfer. If someone other than the user is transferring, it performs an approval check (L69-72). Finally, it adjusts the balances of the source and target accounts.
As we can see here, the ETH in the contract cannot be more or less than what was deposited. The code stipulates that whatever ETH you deposit into the contract can be withdrawn. If you see any comments about WETH crashing, you can safely ignore them.
Overall, the logic of WETH is automated through smart contracts, rather than controlled by a centralized entity. WETH always maintains a 1:1 exchange rate with ETH, so there is no need to worry that it will be significantly affected by centralized entities like custodians (who hold the BTC used to back wBTC and possess the private keys to mint tokens) and intermediaries (who send or receive BTC to mint/burn wBTC), as is the case with wBTC.
However, it is worth mentioning that although the code logic of WETH itself is simple, and the originators have previously clarified that the WETH decoupling was a joke, the WETH FUD continues to ferment. To some extent, it reflects the extreme lack of security in the crypto market following the FTX collapse and the subsequent days of market turmoil.
