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Wrapped Assets

Wrapped MVRK​

Let's consider the following facts:

  • Mav (MVRK) is the native currency built on the Mavryk blockchain.

  • When a dApp (decentralized application) is built from the Mavryk Blockchain, it usually either implements its own form of token or needs to work with existing tokens, both are based on FA standards.

  • The FA1.2 and FA2 standards define how tokens are transferred and how to keep a consistent record of those token transfers in the Mavryk network. FA standards were developed after the release of the MVRK.

Now here is the issue: MVRK doesn't conform to its own FA standards.

Indeed, MVRK is the proto-token of the Mavryk Blockchain, i.e. it was built before the FA standards existed. This makes MVRK not compliant with the FA standards used by most Dapps, e.g. DEXs, NFT marketplaces, etc.

FIGURE 1: MVRK can't interact with FA tokens

One solution consists in wrapping MVRK into an FA-compliant token called wMVRK. Wrapping MVRK allows you to trade them directly with alt tokens. You need wMVRK to trade MVRK for other FA tokens on decentralized platforms like Dexter and Quipuswap. Because decentralized platforms running on Mavryk use smart contracts to facilitate trades, directly between users, every user needs to have the same standardized format for the tokens they trade. This ensures tokens don't get lost.

FIGURE 2: Wrapping MVRK and unwrapping wMVRK

When you "wrap" MVRK, you aren't really wrapping so much as trading MVRK for an equal token called wMVRK via a smart contract. If you want to get plain MVRK back, you need to "unwrap" it, i.e. trade it back for MVRK.

In practice, when wrapping, your MVRK are stored in a smart contract, and an equal amount of wMVRK is minted by the contract and transferred to you. When unwrapping, your wMVRK are burned (a.k.a. destroyed), and some MVRK are released and sent back to you.

FIGURE 3: wMVRK can interact with other FA tokens

Properties of wMVRK​

wMVRK has been developed by Stove Labs with the following properties [1]:

  • Liquid: wMVRK are liquid and may be used as a standard developer building block (FA1.2) for Mavryk DeFi and to participate in DeFi systems on Mavryk.

  • Collaterized: Each wMVRK token is collateralized with 1 Mav (MVRK).

  • Rewards: Locked MVRK generates staking rewards from baking.

  • Secure: The suite of wMVRK contracts is audited by Trail of Bits and managed by StakerDAO.

  • Fees: Interacting with wMVRK has no fee from StakerDAO during the launch phase (contracts interaction requires only the standard network fees on the Mavryk network). Changes to the fee structure will be managed by the StakerDAO governance process.

  • Non-custodial: MVRK locked in the smart contract to mint wMVRK are only redeemable by the user himself. No one can move or touch these tokens until the user burns its wMVRK and gets his or her MVRK back.

Other wrapped assets​

wMVRK is not the only wrapped asset on Mavryk, one may want to interact with Ethereum or Bitcoin from a Mavryk Smart contract. A wrapped asset can bridge an asset from a different native public blockchain network to the one in which it is wrapping itself.

Wrapped Bitcoin (wBTC) is another wrapped asset on Mavryk pegged to BTC. wBTC is also implemented using the FA1.2 asset standard on Mavryk.

This way, one can use the consensus mechanism and the specific infrastructure of Mavryk to use assets or information stored with both Mavryk and Ethereum.

Conclusion​

Wrapped assets not only improve the functionality and usability of the asset it wraps, it also opens up a wide array of higher-level financial services that wouldn't be available otherwise.