What are the challenges presented by centralized stablecoins?

• Trust in a centralized issuer: The foundational principle of Bitcoin and cryptocurrencies is to build a decentralized money transfer system, without needing to trust or depend on third parties. However, centralized stablecoins require trust in a centralized issuer.
• Possibility of censorship and confiscation: The smart contracts of centralized stablecoins include a 'blacklist' feature that allows for the freezing of funds from any address, whether a wallet or a smart contract, preventing token transfers and enabling arbitrary censorship and confiscation of funds from any user.
• ‍Absence of immutability, verifiability, and trustlessness: The smart contracts of these centralized stablecoins use a proxy, meaning that the code they implement is not public and can be changed at the issuer's discretion. This contradicts the fundamental principles that a smart contract should uphold: immutability, verifiability, and trustlessness.

In the face of these challenges, W-Project emerges as an alternative that seeks to provide effective solutions, promoting the adoption of wrapped tokens.

What are the benefits of wrapped tokens?

• Promotes the decentralization of web3.
• Censorship resistance: Wrapped tokens cannot be blocked by the issuer, providing greater security to both users and protocols. With mass adoption, the risk of censorship and arbitrary attacks against web3 users and protocols by institutions is eliminated.
• Standardization: Wrapped tokens fully comply with the ERC-20 standard with 18 decimals and are immutable. This is advantageous for developers of other protocols, as it prevents unexpected behaviors and future failures due to changes in token contracts.

The Wrapped Ether smart contract, on which our token contracts are based, is among the oldest and most widely used. Its code is highly secure and its operation extremely simple and effective: one token goes in, one token comes out. The token wrapping system is price-agnostic, meaning that a wrapped token always equals an underlying token.

In addition to the above, W-Project's wrapped token contracts incorporate low-level functions that allow easy integration into any protocol, without requiring user approval of the wrapped token contract. This means that protocols can work with our wrapped tokens "under the hood", even if users contribute the centralized version of the tokens.

How does this affect the companies issuing centralized stablecoins?

• These companies' business model involves investing the fiat money backing the stablecoin tokens in treasury bills and other instruments, making it independent of how users utilize the stablecoin tokens. Therefore, the use of wrapped tokens does not pose any harm to these companies.
• Regulatory requirements imposed by governments compel these companies to implement measures that allow for the potential censorship of their token usage.
• Adopting W-Project's wrapped tokens is advantageous for these companies, as it absolves them of any legal responsibility without affecting their business operations.