Wrapped Litecoin (WLTC) gained its first decentralized pair on Uniswap, now building up liquidity against Ethereum (ETH). The pair launched two weeks after the creation of the WLTC token.
Litecoin (LTC), one of the oldest legacy cryptos, was tokenized as Wrapped Litecoin (WLTC). The token launched on November 13, and has already entered DeFi space with its first Uniswap pair.
Unlike ETH and BTC, LTC was rarely used as a wrapped asset. The success of WETH and WBTC came from their usage as collaterals. There are some expectations that WLTC can be used in Aave vaults, tapping the value of idle coins.
Whales hold only a small fraction of LTC, with most coins in the hands of investors or retail buyers. The coin also has a culture of long-term holding and accumulation, with an average holding time of 2.6 years. Up to 20% of the supply has been held for more than five years.
The launch of WLTC trading coincided with another LTC rally on centralized exchanges. The ‘dinosaur’ coin reawakened to trade again above $101. LTC is highly liquid, but it is harder to reach for new retail traders. The WLTC market may get a boost from DEX traders that will not have to host the specific Litecoin wallet.
After the wrapping mechanism, traders will be able to store LTC through MetaMask and participate in the highly liquid DeFi ecosystem. There is no guarantee that using WLTC will be cheaper or smoother, as sending LTC may still incur lower fees compared to Ethereum ERC-20 tokens.
The announcement of the WLTC token arrived just weeks after the Litecoin account started rebranding itself as a meme coin. However, the meme part did not take off, as LTC has a different trading profile, requiring a self-custodial wallet and a KYC registration to an exchange. A Uniswap V3 pair can be used without verification, and the wrapping contract will be permissionless.
WLTC starts out as a niche asset
The tokenized version is still not reliably priced due to its very illiquid pool. WLTC traded at a premium, reaching $123, while the spot version remained just above $101.
WLTC traded at a premium against WETH in its first decentralized pair on Uniswap V3. | Source: DexScreener
The token’s appeal suggests traders can put their idle LTC to work. However, an illiquid pair and the wrapping smart contract can mean holders may not be able to immediately access the LTC.
The WLTC token is also just starting out, with just five addresses bridging their LTC onto Ethereum. The biggest deposit is for just 29 LTC. The Wrapped Litecoin idea is also backed by the Coinut exchange, which is popularizing the asset.
For now, even the exchange’s team has not done much to boost the supply of WLTC or provide additional liquidity. The token has been promoted by Dr. Xinxi, the CEO and co-founder of the Coinut exchange. He is one of the main content producers, aiming to revive the Litecoin brand.
Compared to the wide adoption of LTC on exchanges and brokerages, WLTC is still extremely illiquid and risky. There are no partnerships with DeFi or lending pools, or additional DEX pairs. However, if WLTC takes off, it may reach a wider audience of DEX swappers seeking promising assets.
The potential opportunity for arbitrage may also boost WLTC. The current token has the advantage of being one of a kind, with no copycats or alternative versions.
WLTC is still trying to verify its logo on Etherscan, and has warned that it still has only one valid contract address (CA): 0x408133907cd3A75db2B031973b9ea1C084500a15. Any other contracts or tokens may be illiquid and end up stealing LTC.
At this stage, it is up to Litecoin holders to help build up the trading pair. The WLTC price is quoted in WETH, instead of USDT, leading to a different mechanism of price discovery. So far, the liquidity pool has only a bit over 1 ETH in liquidity, making it virtually impossible to sell WLTC at a premium.
LTC has not revisited its all-time high above $420. During the coming bull cycle, LTC is expected to move to a new price range. In the last few years, LTC fell to new lows against BTC, despite short-term price recoveries above $100.
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