Wrapping Treatments

In Bitwave, Wrapping Treatment refers to the system's methodology for recognizing, tracking, and accounting for wrapped tokens. Wrapped tokens are blockchain assets that represent a cryptocurrency from another network. They allow interoperability between blockchains, such as:

WETH (Wrapped ETH) – A tokenized version of Ether that conforms to the ERC-20 standard.

WBTC (Wrapped Bitcoin) – A tokenized representation of Bitcoin on the Ethereum blockchain.

Bitwave provides comprehensive support to handle the nuances of these tokens for both accounting and tax purposes.

Purpose

The Wrapping Treatment functionality ensures that wrapped tokens are accounted for correctly, treated in line with their underlying assets, and do not introduce discrepancies during financial reconciliation or tax reporting. This is especially critical when interacting with DeFi protocols or cross-chain services where wrapped tokens are commonly used.

Key Features

Like-Kind Classification

Wrapped tokens are treated as like-kind assets to their underlying counterparts. For example:

• WETH is treated equivalently to ETH.

• WBTC is treated equivalently to BTC.

This ensures uniformity in asset classification and simplifies ledger entries.

Accurate Conversion Tracking

Conversions between wrapped and unwrapped versions are:

• Logged and timestamped

• Reflected in accounting records

Cost Basis and Gains/Losses Calculation

Bitwave ensures that:

• Cost basis is maintained across the wrapped and unwrapped versions of the asset

• Gains or losses are calculated correctly when a wrapped token is sold or otherwise disposed of

• Any wrapping or unwrapping action does not unintentionally reset cost basis values

This treatment is critical to maintain financial accuracy and compliance.

WRAPPING TREATMENT SETUP

Here are the steps on how to setup the Wrapping Treatment :

Navigate to Administration.
Go to the Wrapping Treatment section
Click on Add Wrapping Treatment
Choose the token pair you want to wrapped.
For example, ETH can be the base coin, while WETH is its wrapped version. You can also pair multiple wrapped tokens with a single token by clicking on "+Add".
Click on Save