Wrapped assets · 6 min read
How Wrapped Assets Are Used in Monad DeFi
Swaps, liquidity pools, lending, and collateral: the common roles wrapped tokens play in Monad applications.
Trading pairs
Decentralized exchanges commonly pair tokens against wrapped MON or stablecoins. Wrapping gives the native asset a standard interface pools can hold.
Lending and collateral
Lending markets accept wrapped assets as collateral. If a wrapped token depegs from its underlying asset, positions using it can be liquidated even when the original asset's price is stable.
Layered risk
Each protocol adds its own contracts and assumptions. A wrapped bitcoin deposited into a pool, whose receipt is then used as collateral, stacks bridge, pool, and lending risks together.
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