Why does WETH use a custodian(BitGO) when Ethereum smart contracts can natively hold eth?
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1WETH on Mainnet does not have any custodian, you can check on etherscan (etherscan.io/address/…). I think you must be referencing something else, in that case, can you provide more information?– Soham ZemseMay 25, 2022 at 12:43
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Perhaps you meant to ask about WBTC instead? WETH is a standalone contract that isn't controlled by anyone.– Ismael ♦May 27, 2022 at 2:58
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2 Answers
It does not.
Custody is about holding a private key (or part of it) on behalf of someone else.
Don't use a custodian service (i.e. BitGo) if you trust your ability to keep your private key safe. Even if you don't have such skills, I suggest learning how to do it, but you can find a custodian service useful in any other case.
Who controls the key, controls the funds (ethers, tokens, etc.) related to that key.
Smart contracts can bind funds to a specific logic to be moved/used.
WETH(*) is a smart contract that supports EIP20. It controls ethers and bonded twin WETH tokens: each ether or part of ether you deposit, you obtain control of the same amount of WETH, and vice-versa.
Following the EIP20 standard, WETH is a clever trick to use ethers as if they were tokens.
But - this is important to understand - WETH does not control those funds. It's the key's owner that controls them. WETH is the logic used to say how those funds can be handled.
(*) = When I say WETH does not control funds, I refer to the smart contract at address 0xc02aaa39b223fe8d0a0e5c4f27ead9083c756cc2. Other smart contracts can behave differently, even if they have the same name ;) So, you always need to check the real code to understand what a contract does.
answered May 25, 2022 at 9:17
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Right, so the smart contract does not control the underlying ETH, correct? Their white paper mentions BitGo as their custodian holding the private key. So my question is why not just send ETH to the contract itself and hold it there without an off-chain 3rd party custodian. ERC20 WETH can be minted when someone sends ETH to the contract address and vice versa? And currently, do you send to BitGo's address for manual create/redeem? May 25, 2022 at 12:17
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BitGo is not related to WETH at all. You don't need them. You send ethers to the smart contract, and you get the same amount in WETH. You send WETH, you get the same amount in ethers. This is the official WETH project's site: weth.io And here you can see the code: etherscan.io/address/… I don't know anything about the BitGo whitepaper you mentioned. May 25, 2022 at 21:56
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To add the ERC20 Standard to it , widely used by DApps.
