WETH FUD Is All a Joke, ETH Withdrawals Still a Priority
Wrapped ether is not like wrapped bitcoin, there are no “concerns” over Ethereum’s “solvency,” and staked ether withdrawals remain a high priority
Source: Shutterstock.com
Crypto pros like to have a laugh, sometimes at neophytes’ expense. But when the joke is obscure enough — in this case wrapped ether memes — it can have real consequences.
Over the weekend, crypto Twitter was alight with riffs on the wave of insolvencies that have plagued the industry, by pretending that wrapped ether (WETH) was somehow a risk to Ethereum. Spoiler: It’s not.
But when enough otherwise serious people pile on to a meme, it can metastasize into market-moving “news.” For instance, Gnosis co-founder Martin Koeppelmann joined in the fun on Sunday.
For crypto natives with an understanding of WETH and how ether is burned post-EIP-1559, the joke is fairly obvious.
To review: WETH is an ERC-20 version of ether that can be used in smart contracts like Uniswap. It dates back to 2017 and is not in any way like a custodial version of ether. For all intents and purposes, it is ether. As such, there’s no connection between WETH and fluctuations in the ETH burn rate due to transaction fees. Ether used as WETH is not being burned and cannot depeg.
But the joke got out of hand. Even quality crypto sources like Bloomberg were taken in. Bloomberg reported that “crypto watchers also pointed to worries about wrapped Ether, which is meant to have the same value as Ether while allowing access to more applications,” with the caveat merely that “some reports suggested the concerns stemmed from joke Twitter posts.” (They later quietly removed the offending paragraphs.)
In fact, there were no actual worries. It was 100 percent a joke from the start.
Dankrad Feist, a researcher at the Ethereum Foundation — the upcoming EIP-4844, also known as “Proto-Danksharding,” is partially named after him — found the Bloomberg fracas a bit off-putting.
Koeppelmann also came clean, explaining the joke and why it made no literal sense in the first place.
To be abundantly clear: WETH is unruggable. It’s not like wBTC — wrapped bitcoin on Ethereum, which relies on a central custodian, BitGo, although there are plenty of misconceptions around the safety of wBTC as well. WETH can always be unwrapped to ETH on a one-to-one basis, as sure as the Ethereum network itself — it’s baked into the immutable code and there is no counterparty.
Staked ether withdrawals are the top priority
This one was less of a meme and more of a misunderstanding, but also one propagated by random folks on Twitter. The “concern” was that somehow the withdrawal of staked ether planned in the next major Ethereum upgrade, known as Shanghai, has been delayed.
That was news to Ethereum developers, such as Prysmatic Labs’ Terence Tsao, developer of the leading Ethereum proof-of-stake consensus implementation, Prysm, who tweeted that “withdrawal remains the highest priority for Prysm.”
“As core devs, our biggest responsibility today is to enable stakers to withdraw their funds as fast and as securely as possible,” he said.
The Shanghai upgrade is expected to take place roughly six months after the Merge, or around the second quarter of 2023. Some pointed to a change in the Ethereum Foundation website regarding the timeline, but the Ethereum Foundation isn’t in the business of specifying dates because they don’t control Ethereum — its development is decentralized.
The best way to keep tabs on what’s actually happening with Shanghai is to follow its progress on GitHub or tune into Ethereum core developer calls — the latest was on Nov. 24, and was summarized by Tim Beiko.
Once again, beware the memes — some observers took the opportunity to turn the entire concept of staked ether into a joke.
Withdrawals are disabled by design until the Shanghai upgrade — this is neither new nor remotely alarming.
The moral of the story: Crypto memes happen fast. If you don’t stop to look around once in a while — or, say, are celebrating Thanksgiving weekend with your family — you could miss it.
Get the news in your inbox. Explore Blockworks newsletters:
- Blockworks Daily: Unpacking crypto and the markets.
- Empire: Crypto news and analysis to start your day.
- Forward Guidance: The intersection of crypto, macro and policy.
- 0xResearch: Alpha directly in your inbox.
- Lightspeed: All things Solana.
- The Drop: Apps, games, memes and more.
- Supply Shock: Bitcoin, bitcoin, bitcoin.
