Knowing nothing about it, this is the question that remains unanswered to me after reading through dozens of comments on this debacle. What was the person who lost half a million trying to accomplish? For what benefit?
I assume that if you just want to use ETH to buy and sell stuff, you don't have to get involved with any of these smart contracts.
There's some detail on weth.io. apparently ETH is not Ethereum (ERC-20) compatible, if you can believe it.
I'm still kind of confused how ypu go from one ERC-20 chain to another. I know there's wrapped Ether on other chains but I'm not clear on how it got there or whether it's a good idea to hold that. Seems like a "not my keys" situation in a way.
You mean buy and sell goods and services? Correct me if I'm wrong, but I don't think basically anyone uses ETH for this (compared to BTC and BCH where at least some merchants exists). If you want to buy and sell tokens in a decentralized fashion, then you'll have to deal with smart contracts.
> I assume that if you just want to use ETH to buy and sell stuff, you don't have to get involved with any of these smart contracts
Correct. If you want to send someone money unconditionally, you can just send it without a smart contract.
> What was the person who lost half a million trying to accomplish?
Why/when to use WETH? From the beginning:
Like Bitcoin, ETH is a crypto currency that has it's own token called ETH (or Ether), you can hold it, send it from one address to another address and earn it by mining. Providing a basic finance and value excahnge platform.
In addition to ETH, Ethereum supports (via Smart Contracts) things called tokens, that are effectively alternative cryptocurrencies. Pre-Ethereum, people needed to create a new chain for each new token, for example you have "NameCoin" and "LiteCoin" and "DogeCoin" and so on. Each has it's own network, initial block, wallet client, mining pools, etc. It's a copy and paste and edit of Bitcoin each time.
With Ethereum, you can create a new token with it's own separate initial supply, precision, allocations etc. on the same blockchain (Ethereum) using a Smart Contract. People can use these tokens on the same network, using the same tools. However there are limits on how different they can be - you can only do what the Ethereum tech allows.
Now as time went on, there were a lot of tokens, and so they developed a standard, ERC20, which is like a C# or Java interface that defines a standard token. With this in place people can write code that interacts with "any token".
I could create a stock exchange contract where people list, place orders etc. to swap tokens. Even once this stock exchange is written and deployed, people can create brand new ERC20 tokens, and because those new tokens meet the interface, the stock exchange will work with it.
This all hots up and of course people naturally want to use these stock exchange, and other contracts (be it gambling, lending, escrow or whatever...) with the original ETH token, since everyone playing has ETH (you need ETH to pay network fees), and it's value is going up and wotnot.
But ETH is not a smart contract. It's hard coded into Ethereum. It was written before ERC20 was standardized. So you can't use Ethereum as one of the tokens in your stock exchange.
WETH offers a way to wrap Ethereum in an ERC20 token and solve that problem!
Since smart contracts can define rules about deposits, withdrawals, etc, and smart contracts can own their own Ethereum. This wrapping can be done purely in code. No need to trust "WETH Inc"*.
WETH is basically an "adaptor" from the gang of 4 design patterns.
* Other wrapped coins usually require trust. For example "Tether" wraps USD, but it requires a company to manage the bank accounts. People may decide they don't believe that company really has the funds, or the parent company could be put out of business by a government. WETH on the other hand is wrapping something on the blockchain in a code-automated way.
You can make mistakes (like the OP) but unless there is a big security hole no one has discovered, you can't have the money stolen or confiscated unless your private keys are compromised.*
Thanks for the explanation. So presumably the person involved was intending ultimately to do something involving some market that uses WETH rather than ETH, and was unwisely testing how the system works with ETH worth half a million dollars rather than five dollars. (Or possibly they changed their minds about using WETH for some purpose, and so just wanted their ETH back?)
Yeah, having done this myself, a use case might be:
1. Buy ETH
2. Convert to WETH
3. Swap for TOKEN
4. Hold TOKEN
5. Swap token back for WETH (hopefully made a profit there)
6. Convert WETH back for ETH
I did this using Metamask / Uniswap so it is all done for you. So I had no need to understand how the contract works. Also didn't have anywhere near $500k!
Knowing nothing about it, this is the question that remains unanswered to me after reading through dozens of comments on this debacle. What was the person who lost half a million trying to accomplish? For what benefit?
I assume that if you just want to use ETH to buy and sell stuff, you don't have to get involved with any of these smart contracts.