Crypto influencers started a joke about wrapped Ethereum (WETH) losing its peg and becoming insolvent over the weekend, causing a brief panic within the community.
The joke started on Nov. 26 when blockchain developer Cygaar tweeted that WETH was about to become insolvent and that they would bail out anyone at a rate of 0.5 ETH for one WETH.
ATTENTION: WETH is about to be insolvent.
I will begrudgingly bail out anyone holding WETH at a rate of 0.5 ETH per WETH in order to save this space. You can thank me once the crisis has been adverted.
— cygaar (@0xCygaar) November 26, 2022
Other popular Ethereum advocates also joined in on the joke. Anthony Sassano, popularly known as sassal.eth, tweeted that someone he trusts told him that WETH would collapse. He, therefore, advised anyone exposed to be concerned.
Gnosis founder Martin Köppelmann said the constant burning of ETH means that WETH is no longer fully backed, and there might be a bank run soon.
As ETH gets constantly burned wrapped ETH (WETH) is no longer fully backed by it. We might see a bank run on redeeming WETH soon.
— Martin Köppelmann 🇺🇦 (@koeppelmann) November 27, 2022
Ethereum co-founder Vitalik Buterin joined in the joke, saying WETH and WEF sounded alike.
Personally I’m more surprised that no one has yet noticed how WETH and WEF sound so similar. Use WETH, eat the bugs!
— vitalik.eth (@VitalikButerin) November 28, 2022
At the same time, Tron founder Justin Sun joked that he and Buterin would invest $2 billion into WEF to recover lost funds.
As a humble member of the crypto industry, I personnally have discussed with my BFF @VitalikButerin and together we will invest $2b into WEF to recover all the funds. Stay #SAFU! Stay strong! https://t.co/UmjtljyRNz
— H.E. Justin Sun🌞🇬🇩🇩🇲🔥 (@justinsuntron) November 28, 2022
Meanwhile, they soon clarified that they were joking, adding that WETH was as strong as ever and could not be affected by a bank run.
WETH is under no threat
A Nov. 27 Twitter thread from Ethereum developer Hudson Jameson explained the joke and why it was funny to the Ethereum community. According to him, WETH is a smart contract that accepts ETH in exchange for WETH, which is an ERC-20 token.
There are a lot of funny jokes today about WETH (wrapped ether) crashing or being insolvent. WETH is not in trouble, and I want to explain the joke for those who may have been worried seeing the tweets today.
— Hudson Jameson (@hudsonjameson) November 27, 2022
Since WETH operates through a smart contract, its price does not deviate from ETH, and a centralized exchange or group does not store it. This means a bank run can’t happen. He said:
“The WETH jokes today play on the fact that WETH is an ERC-20 token that is impossible to go insolvent (besides an unlikely contract flaw) and will always be backed 1-to-1 by the ether deposited by you.”
Did the WETH joke cause FUD?
While the crypto community joked about the WETH peg, Ethereum’s price fell by over 4% during the weekend, according to CryptoSlate data.
According to Richard Heart, jokes about WETH depegging from ETH “could get the silliest of users rekt .”
There’s a joke going around about #WETH depending from #ETH. All the big names are playing with it including vitalik. I am not because I don’t think joking about things that could get the silliest of users rekt is funny. Thus my jokes suck a bit more, but save more lives.
— Richard Heart (@RichardHeartWin) November 28, 2022
Mainstream publication Bloomberg News also reported that some analysts had raised concerns over wrapped Ether. According to the newswire, the concerns were raised from jokes on Twitter that falsely claimed wrapped Ether’s value depegged from Ether.
Dankrad Feist highlighted that outsiders not aware of the workings of ETH would not realize that “there is literally almost zero risk.” As such, he advised that such tweets should be clearly marked as jokes.
A lot of people making jokes about WETH.
Please be aware it may not be obvious to outsiders that it’s completely different from bridged assets and there is literally almost zero risk. I think it would be better to mark these more clearly as jokes.
— Dankrad Feist (@dankrad) November 27, 2022