Learning the friendly way

Cashback is essentially getting paid to shop for things you'd buy anyway. Whether you're a seasoned rewards hunter or just curious about making your money work harder, this guide explores how savvy consumers are earning while spending, without changing their shopping habits. Ready to turn your everyday purchases into extra cash? Let's dive in.

What is cashback? 

Cashback is a rewards program that gives you a percentage of your money back when you make purchases using eligible credit cards, debit cards, or shopping platforms. Think of it as a small rebate on what you spend, typically ranging from 1% to 5% of your purchase amount. 

In recent years, cashback has increased in popularity across financial services and retail, becoming one of the most straightforward and appealing customer incentives (no guesses why).

Unlike complicated points systems or airline miles, cashback offers a simple proposition: spend money and get some of it back. Cashback transforms everyday spending into an opportunity to save, whether through your credit card statement, a bank transfer, or an app balance.

How does cashback work?

At its core, cashback operates on a simple principle: when you spend money, you earn a percentage back. This percentage - known as the cashback rate - determines how much you'll receive. For example, a 2% cashback rate means you'll get $2 back for every $100 you spend.

Here's what happens behind the scenes:

1. You make a purchase with your cashback-enabled card or through a cashback platform.
2. The transaction is processed and qualified against the program's terms.
3. Cashback is calculated based on the purchase amount and applicable rate.
4. The reward is credited to your account (either immediately or after a designated period).

Cashback rewards are typically issued as:

• Statement credits (reducing what you owe on your credit card)
• Direct deposits to your bank account
• Digital wallet credits within an app
• Gift cards or vouchers for specific retailers

Most cashback programs are funded through transaction fees that merchants pay to credit card companies (typically 2-3% of each purchase). The card issuer then shares a portion of these fees with you as cashback. For retailer programs and cashback apps, the incentive is funded through marketing budgets as they benefit from increased customer spending and loyalty.

Different types of cashback programs

Credit card cashback

Credit cards are a common way to earn cashback, generally structured in three main formats:

1. Flat-rate cashback cards 

These cards offer the same cashback rate on all purchases, regardless of category. For example, the Citi® Double Cash Card offers up to 2% on all purchases (1% when you buy, 1% when you pay). Note that rewards are earned as ThankYou® Points, which can be redeemed for cash back or other options.

2. Tiered/category cashback cards 

These offer higher cashback rates in specific categories and lower rates elsewhere. For instance, the Blue Cash Preferred® Card from American Express offers 6% back at U.S. supermarkets (up to $6,000 per year), 6% on select U.S. streaming services, 3% on transit and U.S. gas stations, and 1% on everything else.

3. Rotating category cards

These cards offer higher cashback (often 5%) in categories that change each quarter,  such as restaurants, gas stations, or online shopping.
For example, The Chase Freedom Flex℠  and Discover it® cash back programs require users to activate these categories each quarter, from where they can earn up to 5% cashback on purchases. 

Debit card cashback

Differing from the credit card structure above, debit card cashback typically comes in two forms:

1. Bank-offered cashback programs 

Rewards for using your debit card for purchases. These are often tied to premium or business accounts and offer lower rates than credit cards (typically 0.5%-1%) since banks don't earn the same merchant fees that credit card companies do.

Examples include: Discover Cashback Debit offering 1% on up to $3,000 in monthly purchases; while some neobanks or fintechs offer promotional cashback for debit use, but these are often time-limited (Not at Tap).

2. Cash back at checkout 

This feature allows you to withdraw cash alongside your purchase at certain retailers (e.g., Walmart, Walgreens, or pharmacies), essentially getting "cash back" at the point of sale. This isn't a reward but a convenience service.

Retailer-specific programs

Many stores offer their own cashback programs:

1. Store loyalty programs 

These provide rebates on purchases, often tracked through a membership account. Examples include Target Circle, which offers 1% in rewards on qualifying purchases, or Kohl's Cash, which gives you $10 in store credit for every $50 spent during promotional periods.

2. Receipt scanning programs 

Apps like Ibotta and Checkout 51 offer cashback when users upload receipts or link loyalty cards. Offers vary by retailer and product.

Cashback websites and apps

These third-party platforms connect shoppers with retailers and share the commission they receive:

1. Cashback websites 

Websites like Rakuten, TopCashback, and BeFrugal offer rebates when you shop at partner retailers through their portal. These sites earn commissions from retailers for referring customers and share a portion with you.

2. Browser extensions 

Honey (owned by PayPal) and Capital One Shopping apply coupons and may offer cashback (called “Honey Gold” or Capital One Shopping Credits), though amounts and eligibility vary.

However, these platforms often come with caveats:

• Cashback typically pays out quarterly rather than immediately
• Minimum payout thresholds may apply (often $5-$25)
• Some offers are region-specific or limited-time

How much cashback can you earn?

Cashback earnings vary widely across programs:

Typical credit card rates range from 1% to 2% as a baseline, with category bonuses reaching 3% to 6%. Premium cards may offer higher rates but often carry annual fees.

Sign-up bonuses can significantly boost initial earnings, sometimes offering $150-$300 back after spending a certain amount in the first few months.

Cashback apps and websites typically offer higher percentages (often 2%-10%) but on a more limited selection of retailers.

Most programs include some limitations:

• Spending caps that limit cashback on certain categories (e.g., 6% on groceries up to $6,000 yearly)
• Minimum spend requirements before cashback activates
• Redemption thresholds requiring you to accumulate a minimum amount (often $20-$25) before cashing out
• Quarterly or annual payment schedules rather than immediate rewards

How much cashback can you earn with Tap?

Looking for a cashback program that gives you Cashback rewards on your your spendings and not just at specific brands or places? Tap makes it easy. By using your Tap card, you earn Cashback rewards on your spending, from groceries to fuel and even holidays.

How much can you earn? With Tap’s flexible premium tiers, cashback rewards are tailored to fit your lifestyle: earn from 0.5% up to 8% on every eligible purchase made with your Tap card. The more you spend, the more you earn—simple as that.

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Pros and cons of cashback programs

Pros

• Simplicity: Cash rewards are straightforward to understand and use
• Flexibility: Unlike points or miles, cash can be used for anything
• Automatic earnings: Most programs require minimal effort beyond using the right card
• No devaluation: Unlike travel points, a dollar of cashback remains a dollar
• Immediate value: No need to save up for specific redemptions

Cons

• Potential for overspending: The promise of cashback can encourage unnecessary purchases
• Hidden costs: Cards with generous cashback may have higher annual fees or interest rates
• Category restrictions: Many programs limit higher cashback to specific merchant types
• Reward caps: Many programs limit how much you can earn in bonus categories
• Redemption delays: Some programs only pay out quarterly or when you reach certain thresholds

Is Cashback really free money?

Cashback isn't exactly "free", it's better understood as a discount on your spending. The funding comes from several sources:

Debit and Credit card cashback is funded by interchange fees paid by merchants (typically 1.5%-3.5% of each transaction). Card issuers share a portion of these fees with cardholders to encourage more spending.

Retail cashback programs are essentially marketing expenses designed to drive sales and customer loyalty.

Cashback apps and websites earn affiliate commissions from retailers and share a portion with users.

The most important caveat: cashback on credit cards only makes financial sense if you pay your balance in full each month. If you carry a balance, the interest charges (often 15%-25% APR) will quickly exceed any cashback earned.

How to choose the right cashback option

Finding the best cashback program depends on your spending patterns and preferences:

Analyse your spending habits: Review your monthly expenses to identify where you spend the most. If groceries and gas dominate your budget, a card with bonus rewards in those categories makes sense. If your spending is diverse, a flat-rate card might be better.

Consider fees vs rewards: Some cards with higher cashback rates charge annual fees. Calculate whether your typical spending will earn enough extra cashback to offset any fees.

Evaluate redemption options: Consider how and when you can access your cashback. Some programs offer automatic redemption, while others require manual redemption or have minimum thresholds.

For businesses: Business-specific cashback cards often offer higher rewards on categories like office supplies, internet services, and travel. If you're a business owner, these specialised options may provide better value than consumer cards.

Tips to maximise cashback

Strategically use multiple cards: You can use different cards for different categories based on which offers the highest rate for each spending type.

Stack rewards programs: Combine a cashback credit card with a cashback app or website for double dipping. For example, make a purchase through Rakuten using a cashback credit card.

Activate bonus categories: Many cards require quarterly activation of rotating bonus categories - set calendar reminders so you don't miss out.

Pay bills with cashback cards: Set up utilities, subscriptions, and other regular payments on your best cashback card (if there's no processing fee).

Watch for promotional offers: Many programs offer limited-time enhanced cashback rates or bonus categories.

Avoid carrying balances: Always pay your credit card bill in full to avoid interest charges that negate cashback benefits.

In conclusion

Cashback rewards offer a practical way to earn while you spend on everyday purchases. Unlike complicated reward systems, cashback provides straightforward value that anyone can understand and use.

Choose cards and apps that reward your existing spending patterns rather than changing your habits to chase rewards. Also, try maximising cashback benefits by matching the right programs to your spending habits and being disciplined about your purchasing behaviour.

Remember: the best cashback strategy is one that fits naturally into your financial life, providing rewards without encouraging overspending or complicating your finances.

Tired of complicated cashback programs tied to specific brands? Discover our simple Cashback program that rewards you when you spend with your Tap card, learn more here.

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Hey Tap community
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If you’ve been wondering why things have seemed a little quiet lately, it’s because we’ve been hard at work behind the scenes — and today, We are excited to finally share the full story and what’s coming next.

Laying the groundwork for the next wave of features

Over the past five years, Tap’s fast-paced, lean approach helped us grow quickly. But growth brought challenges.
Our infrastructure, built for a much smaller platform, was starting to hold us back — especially during big launches or promotions. It wasn’t scaling the way you, our community, deserved.

Rather than continue patching and stretching it, we made the bold decision to rebuild Tap’s core systems from the ground up — upgrading to a modern, flexible architecture built for real growth.

 It wasn’t easy. It meant months of intense work, rewriting large parts of our platform. That’s why new features slowed down — because we were laying a much stronger foundation for the future.

Now, we're Ready to start the rollout

After months of development and testing, we’re kicking off Phase 1 of the migration to our new infrastructure.

📅 Maintenance Window

• Starts: Wednesday, May 7, 2025 at 21:30 UTC
• Ends: Thursday, May 8, 2025 at 07:30 UTC
• Impact: Tap services will be temporarily unavailable for about 10 hours

This maintenance allows us to move our internal Tap team to the new system — a critical step before we start migrating you, our users.
We've scheduled it overnight to minimise disruption, and our team will be working around the clock to ensure everything runs smoothly.

What happens after this?

Once internal testing is complete, we'll begin carefully moving users over in phases:

• Phase 2: Migrate select groups of users, monitor closely, fine-tune.
• Phase 3: Roll out to all users, officially retiring the old system.

Each phase brings us closer to a faster, more reliable Tap — one that’s ready to scale with our growing community and deliver new features faster than ever.

The future starts now

This upgrade unlocks a future where downtime, failed sign-ups, and app slowdowns are things of the past. Thank you for sticking with us through this transition.

Your patience means everything. We can't wait to show you what’s coming next. The quiet period is ending — and Tap’s next chapter is just beginning.

Stay tuned,
The Tap Team.

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Near Protocol represents a new generation of blockchain platforms focused on usability and scalability. Launched in 2020, it offers a faster, more efficient alternative to earlier blockchain networks while maintaining robust security.

After several years of implementation, Near Protocol has established itself as a notable player in the layer-1 blockchain space.

TLDR

Scalable & developer-friendly: Near Protocol is a decentralised, layer-1 blockchain designed for high scalability and user-friendly dapp development.

Sharding & low fees: It uses a unique sharded Proof-of-Stake mechanism (Nightshade) to process transactions efficiently while keeping costs low.

Cross-chain interoperability: The Rainbow Bridge enables seamless asset transfers between Near and Ethereum, enhancing blockchain connectivity.

Native token (NEAR): NEAR powers the ecosystem, used for transactions, staking, and governance, with a total supply cap of 1.23 billion tokens.

What is Near Protocol (NEAR)?

Near Protocol is a decentralised blockchain platform designed to be user-friendly and highly scalable. The platform supports the development of dapps (decentralised applications) with a particular focus on usability for both developers and end users. 

The platform utilises a Delegated Proof-of-Stake (DPoS) consensus mechanism called "Nightshade," which implements a technique known as sharding to significantly improve transaction throughput. This approach allows Near to process thousands of transactions per second while maintaining low transaction costs and reducing the environmental impact compared to Proof-of-Work blockchains.

A distinctive feature of Near Protocol is its human-readable account names, eliminating the need for users to interact with long, complex wallet addresses. The platform also incorporates a developer-friendly environment with WebAssembly (WASM) support and tools that make building dapps more accessible.

The platform has gained significant attention for its cross-chain interoperability solutions, particularly through the Rainbow Bridge, which enables asset transfers between Near and Ethereum. The platform has attracted numerous projects across DeFi, NFTs, gaming, and social applications.

Who Created Near Protocol? 

Near Protocol was founded by Erik Trautman, an entrepreneur whose background includes experience on Wall Street and founding Viking Education. 

Trautman partnered with two technical co-founders: Illia Polosukhin, a seasoned software developer with over a decade of industry experience including a three-year tenure at Google, and Alexander Skidanov, a computer scientist whose career path led from Microsoft to memSQL, where he rose to become Director of Engineering. 

This founding team combined financial market knowledge, machine learning expertise, and distributed systems experience to address the scalability challenges facing blockchain technology.

The project was conceptualised in 2018 when the founders recognised the scalability limitations of existing blockchain networks. They set out to build a platform that could deliver the performance needed for mainstream adoption while maintaining security and decentralisation.

The Near team has expanded to include numerous contributors from around the world, with the protocol's development being overseen by the Swiss-based Near Foundation, which provides governance and supports ecosystem growth.

How Does Near Protocol Work? 

Consensus Mechanism and Architecture

Near Protocol operates on a sharded architecture called Nightshade, which divides the network into multiple segments (shards) that process transactions in parallel. This design allows the network to scale horizontally as demand increases and enhances transaction throughput.

This design allows the network to process a high number of transactions per second while maintaining low fees and reducing environmental impact. 

Additionally, Near utilises a mechanism called "Doomslug" for block finalisation, achieving near-instant transaction finality. This means that once transactions are confirmed, they are immediately considered final, unlike some other blockchains that require multiple confirmations.

Near achieves consensus through its unique sharded Proof-of-Stake mechanism, where token holders can stake their NEAR or delegate it to validators who help secure the network. 

Smart Contract Support

The platform supports smart contracts written in Rust and JavaScript, compiled to WebAssembly (WASM) through the AssemblyScript framework. This flexibility enables developers to build complex applications with familiar programming languages.

User-Friendly Features

Near's account model features human-readable account names, simplifying interactions by eliminating the need for complex wallet addresses. The platform also offers account abstraction, allowing for recoverable accounts, multi-signature control, and the ability for users to cover transaction fees on behalf of others, facilitating gasless transactions.

Cross-Chain Interoperability

Near has developed the Rainbow Bridge, enabling seamless asset transfers between Near and Ethereum. This cross-chain interoperability expands the utility of assets and enhances the interconnectedness of the blockchain ecosystem.

What Is NEAR? 

NEAR is the native token of the Near Protocol ecosystem. It serves multiple purposes within the network, including:

• Paying for transaction fees and storage on the blockchain
• Staking to participate in network security and earn rewards
• Voting in governance decisions to determine the future direction of the protocol

The token follows an inflationary model with a maximum supply cap of 1.23 billion tokens, of which approximately 1.18 billion are already in circulation at the time of writing. 

How can I buy and sell NEAR? 

If you're interested in exploring NEAR, you can do so easily through the Tap app. The app supports buying, selling, trading, and storing NEAR tokens, allowing users to manage NEAR alongside other digital assets.

In today's digital-first economy, businesses across all sectors are seeking innovative financial solutions to drive efficiency, enhance customer experiences, and unlock new revenue streams. One compelling strategy is the implementation of co-branded credit cards, which have been shown to significantly boost customer loyalty and spending.

Notably, 75% of financially stable consumers prefer co-branded cards for their rewards and benefits, indicating a strong alignment between these card programs and consumer desires.

By collaborating with financial institutions to offer co-branded cards, businesses can create tailored payment solutions that meet customer expectations and reinforce brand loyalty. This approach transforms the payment infrastructure from a mere operational necessity into a strategic asset that fuels growth.

For instance, the co-branded credit card market is projected to grow from $13.41 billion in 2023 to $25.72 billion by 2030, reflecting a compound annual growth rate (CAGR) of 9.74%.

Whether you're in retail, SaaS, or manufacturing, a tailored card program could be the key to transforming how your business engages with customers—and how you scale.

What is card program management?

Card program management encompasses the end-to-end process of designing, implementing, and optimising payment card solutions tailored to your business. From corporate expense cards that streamline internal processes to branded payment cards that enhance customer loyalty, these programs offer versatility that can benefit virtually any organisation looking to modernise its financial operations.

As businesses continue to navigate increasingly complex markets, those equipped with flexible financial tools gain a significant competitive advantage. The right card program doesn't just process payments—it generates valuable data, reduces administrative burden, and creates opportunities for deeper engagement with both employees and customers.

Why it matters

At its core, card program management involves overseeing all aspects of a payment card ecosystem—from issuing and distribution to transaction processing, reporting, and compliance. Modern card program management platforms provide businesses with the infrastructure to create customised payment solutions while maintaining visibility and control.

This matters because traditional payment methods often create friction points that slow business growth. Manual expense reporting, limited payment visibility, and rigid financial systems can drain resources and limit innovation. 

However, a well-managed card program addresses these pain points by automating processes, enhancing security, and providing greater flexibility.

Key benefits for businesses across sectors

Streamlined operations

Card programs dramatically reduce administrative overhead by automating expense tracking, simplifying reconciliation, and eliminating paper-based processes. This operational efficiency translates directly to cost savings and allows your team to focus on strategic initiatives rather than transaction management.

Enhanced Customer Experience

For businesses that implement customer-facing card programs, the benefits extend to experience enhancement. Branded payment cards can strengthen loyalty, while instant issuance capabilities meet modern expectations for immediacy. 

From hospitality to healthcare, organisations are using card programs to differentiate their service offerings.

Data-driven insights

Perhaps the most overlooked advantage of modern card program management is the wealth of data it generates. Every transaction becomes a data point that can inform business decisions, reveal spending patterns, and identify opportunities for optimisation. This business intelligence becomes increasingly valuable as programs scale.

Scalability and flexibility

As your business grows, your card program can evolve alongside it. Whether you're expanding into new markets or adding new product lines, a well-designed card program adapts to changing requirements without requiring complete system overhauls.

The implementation process simplified

Implementing a card program doesn't have to be overwhelming. The process typically follows these key steps:

1. Assessment and strategy development: Evaluate your current payment ecosystem and define clear objectives for your card program.
2. Platform selection and integration: Choose a card program management solution that aligns with your technical requirements and business goals, then integrate it with your existing systems.
3. Program launch and optimisation: Deploy your program with proper training and support, then continuously refine based on performance data and user feedback.

Real-World Impact

Across industries, businesses are leveraging card program management to solve specific challenges:

• Retail companies are implementing instant digital card issuance to capture sales opportunities.

•  Healthcare providers are using specialised payment cards to simplify patient financial assistance.
• Manufacturing firms are deploying corporate card programs with custom spending controls to streamline procurement.

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The common thread? Each organisation is using card program management as a strategic tool rather than just a payment method.

How Tap can help

Navigating the complexities of card program management requires expertise and the right technology partner. Tap's comprehensive platform brings together cutting-edge technology with industry-specific knowledge to help businesses design, implement, and optimise card programs that deliver measurable results.

Our solution addresses common challenges like regulatory compliance, security concerns, and integration complexities, allowing you to focus on the strategic benefits rather than implementation hurdles.

Ready to explore how card program management could transform your business operations and drive growth? Connect with Tap's team of specialists for a personalised consultation and discover the potential of a tailored card program for your organisation.

Article Framework: Card Program Management

Tone & Perspective

• Tone: Professional, informative, and authoritative.
• Perspective: Written from an expert viewpoint, educating businesses on launching and managing a successful card program.

Priority Headings & Structure

1. Introduction

• What is card program management?
• Why businesses need effective card program management.
• Overview of key stakeholders (issuers, networks, processors, etc.).

2. How Card Program Management Works

• Key components: issuing, processing, compliance, and risk management.
• The role of a program manager (self-managed vs. outsourced).
• The relationship between issuing banks, networks, and program managers.

3. Core Elements of a Successful Card Program

• Program Design: Choosing card types (prepaid, debit, credit), network selection (Visa, Mastercard), and branding.
• Issuance & Account Management: BIN sponsorship, account setup, and customer onboarding.
• Compliance & Risk Management: KYC, AML, PCI DSS, and fraud prevention strategies.
• Transaction Processing & Settlement: How funds flow through the ecosystem.
• Customer Experience & Support: Ensuring smooth cardholder interactions.

4. Self-Managed vs. Partner-Managed Card Programs

• Benefits and challenges of managing in-house.
• When outsourcing makes sense.
• How third-party program managers add value.

5. Key Considerations Before Launching a Card Program

• Business goals and revenue model.
• Regulatory and security requirements.
• Time-to-market considerations.

6. Trends & Future of Card Program Management

• Embedded finance & BaaS (Banking-as-a-Service).
• AI-driven fraud detection and risk management.
• Open banking and API-driven solutions.

7. Conclusion & Next Steps

• Recap of key insights.
• How businesses can get started with a card program.
• Contact a program management expert.

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Imagine you have euros in your wallet but need to spend dollars at a store. You'd need to exchange your currency first, right? Wrapped crypto works in a similar way, but for blockchain assets.

Wrapped cryptocurrency is a tokenised version of another crypto asset that lives on a different blockchain. Think of it as your original crypto asset wearing an outer layer that lets it work on another blockchain network. For example, Bitcoin can't naturally function on the Ethereum network because they're separate systems with different rules. 

But by "wrapping" Bitcoin, you get a token that represents Bitcoin's value while being compatible with Ethereum's ecosystem.

This seemingly simple innovation has become a cornerstone of decentralised finance (DeFi), allowing assets to move between otherwise isolated blockchain ecosystems and unlocking billions of dollars in cross-chain liquidity.

How wrapped crypto works

The wrapping process involves three key elements: custodians, merchants, and smart contracts.

Here's how it typically works:

1. Deposit: You send your original cryptocurrency (like Bitcoin) to a custodian—an entity or smart contract that holds your assets safely.
2. Minting: Once the custodian confirms receipt of your deposit, they mint an equivalent amount of wrapped tokens (like WBTC) on the target blockchain.
3. Release: These newly created wrapped tokens are then sent to your wallet on the new blockchain, ready to use.

When you want your original tokens back, you simply reverse the process—a procedure called "unwrapping" or "burning":

1. Return: You send your wrapped tokens back to the custodian.
2. Burn: The wrapped tokens are destroyed (burned).
3. Release: The equivalent amount of the original cryptocurrency is returned to your wallet.

This process ensures a 1:1 backing between wrapped tokens and their underlying assets, similar to how stablecoins maintain their value through reserves. For every wrapped Bitcoin (WBTC) in circulation, there's one real Bitcoin held in reserve by a custodian.

Benefits of wrapped crypto

Cross-chain compatibility

The most obvious benefit is interoperability. Wrapped tokens allow assets from one blockchain to participate in activities on completely different networks. Bitcoin holders can participate in Ethereum-based DeFi without selling their Bitcoin, while Ethereum users can access the value and liquidity of Bitcoin without leaving their preferred ecosystem.

Expanded DeFi possibilities

Before wrapped tokens, assets like Bitcoin were essentially locked out of the booming DeFi space. Now, billions of dollars worth of previously idle assets can earn yields, serve as collateral for loans, or provide liquidity to trading pools.

Enhanced functionality

When assets like Bitcoin get wrapped as ERC-20 tokens on Ethereum, they gain new capabilities:

• Smart contract interaction: Bitcoin doesn't natively support complex smart contracts, but wrapped Bitcoin on Ethereum can interact with any Ethereum smart contract.
• Faster settlements: Bitcoin transactions typically take about 10 minutes to confirm, while Ethereum transactions complete in seconds or minutes, making wrapped Bitcoin potentially more practical for everyday transactions.

Liquidity boosts

By making assets usable across multiple blockchains, wrapped tokens significantly increase market liquidity. The same value can now participate in various ecosystems without being split across different platforms.

Common types of wrapped tokens

Wrapped Bitcoin (WBTC)

The most popular wrapped token by market cap, WBTC brings Bitcoin's massive value onto the Ethereum blockchain. Each WBTC is backed by one Bitcoin held in reserve. This has allowed billions of dollars worth of Bitcoin to participate in Ethereum's DeFi ecosystem.

Wrapped Ether (WETH)

Interestingly, even Ethereum's native currency (Ether) has a wrapped version. Why? The original Ethereum token (ETH) predates the ERC-20 standard that most Ethereum tokens follow. WETH makes ETH compatible with dapps that require the standard ERC-20 format.

Other Notable Wrapped Assets

As cross-chain functionality becomes increasingly important, we're seeing more wrapped versions of various assets:

• Wrapped AVAX (WAVAX) on Ethereum
• Wrapped UST (Terra stablecoin) on various chains
• Wrapped tokens of various layer-1 cryptocurrencies

How to use wrapped tokens in DeFi

Lending and borrowing

Platforms like Aave, Compound, and MakerDAO allow users to deposit wrapped assets as collateral to borrow other cryptocurrencies. This means you can leverage your Bitcoin holdings to access stablecoins or other tokens without selling your BTC.

Liquidity provision

Decentralised exchanges like Uniswap and SushiSwap rely on liquidity providers to enable trading. By providing wrapped tokens to these liquidity pools, users can earn trading fees and additional rewards.

For example, the WBTC/ETH pool on Uniswap has consistently been one of the largest liquidity pools, enabling billions in trading volume between Bitcoin and Ethereum.

Yield farming

Many DeFi protocols offer incentives for users who provide liquidity or lend assets. Wrapped tokens allow users to participate in these "yield farming" opportunities across multiple blockchains, potentially maximising returns.

Risks involved

Custodial risks

Most wrapped tokens rely on custodians to hold the original assets, introducing an element of centralisation and trust. If the custodian is compromised or acts maliciously, your wrapped tokens could become worthless.

For instance, WBTC relies on BitGo as its primary custodian. While BitGo maintains high security standards, this represents a potential single point of failure in an otherwise decentralised system.

Smart contract vulnerabilities

Wrapped tokens, like all blockchain assets involving smart contracts, face potential security risks. Bugs or exploits in the smart contracts governing wrapped tokens could lead to fund losses.

Minting and redemption friction

The process of wrapping and unwrapping tokens often involves fees, waiting periods, and minimum amounts. These friction points can make wrapped tokens less practical for smaller transactions or quick trades.

Bridge attacks

Cross-chain bridges, which facilitate the creation of many wrapped tokens, have been frequent targets for hackers. Several high-profile attacks have resulted in millions of dollars in losses.

The future of wrapped tokens

Decentralised wrapping mechanisms

The industry is moving toward more decentralised wrapping processes that reduce reliance on centralised custodians. Projects like tBTC and renBTC are exploring new models where custody is distributed among multiple parties or managed entirely by smart contracts.

Multi-chain integration

As blockchain ecosystems evolve toward greater interoperability, wrapped tokens are likely to play a crucial role in creating seamless experiences across multiple chains. Users may eventually interact with different blockchains without even realising they're using wrapped assets behind the scenes.

Standardisation and regulation

As wrapped tokens become more integrated into mainstream finance, we can expect more standardised practices and potentially increased regulatory attention, particularly around reserve verification and consumer protection.

Bridging the blockchain islands

Wrapped tokens have essentially built bridges between previously isolated blockchain islands, creating a connected DeFi landscape where assets flow freely across networks. They give users remarkable flexibility – allowing them to use Solana's speed while accessing Ethereum's rich application environment.

While these tokens solve major interoperability challenges, it's worth remembering their trade-offs. The centralized custody model goes against blockchain's decentralization principles, and security risks exist.

Though we'll eventually see more sophisticated cross-chain solutions emerge, wrapped tokens currently serve as the vital connectors powering our increasingly interconnected crypto economy.

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Sure, crypto markets reacting negatively to macroeconomic policy shifts is nothing new, but these “worse than expected” Liberation Day tariff announcements have been particularly brutal. 

Looking at the numbers, the sweeping tariffs introduced by U.S. President Donald Trump have resulted in mass liquidations. Almost a week later, $8.27 trillion has been wiped from global stock markets and $233 billion from crypto markets, bringing the overall crypto market cap down 8.5%.

But how exactly do tariffs influence crypto? The immediate reaction was a sharp downturn, with big names like Bitcoin falling below $82,000, and later $74,700, and Ethereum dropping to lows of $1,400. 

In the long term, could these economic policies position crypto as a safe haven? Let’s explore the interplay between trade policy, traditional finance, and crypto prices.

Firstly, what are tariffs, and how do they affect the markets?

In a nutshell, tariffs, or taxes on imported goods, create ripple effects across various financial markets. Historically, they have had an impact on:

• Foreign exchange (FX) markets: The USD typically strengthens when tariffs are imposed, as more global investors seek stability, and in response, a stronger USD often puts downward pressure on Bitcoin and altcoins.
• Equities: Stocks, particularly in sectors reliant on global trade, tend to decline as tariffs increase business costs and disrupt supply chains.
• Inflation & interest rates: Tariffs can contribute to higher consumer prices, influencing Federal Reserve policy and liquidity conditions, which in turn affect investment in risk assets like crypto.

The interconnected nature of these macroeconomic factors proves once again that digital assets are not insulated from traditional market turbulence. Let’s explore the damages.

Trump’s “Liberation Day” tariff announcement

So, what happened? On 3 April, Trump announced a 10% baseline tariff on U.S. imports, with 60 countries, including Cambodia, China, Vietnam, Malaysia, and Bangladesh, facing tariffs of up to 50%. Companies in the EU will see 20% tariffs, all taking effect a week later. 

Previously announced 25% tariffs on steel, aluminum, and foreign-made cars remain in place.

How the crypto market responded

Never missing a beat, the crypto market reacted swiftly to the tariff announcements:

• Bitcoin has dropped ~10% since February. On 3 April, the price fell from $87,106 to $82,526 in a matter of hours, falling to lows of $74,700 days later. 
• Ethereum followed a similar trajectory, dipping to lows of $1,430.
• Altcoins were hit harder, with SOL dropping nearly 25% to $97.52 - its first dip below $100 since February 2024.
• Crypto-related equities tanked, with Strategy (formerly MicroStrategy) down 15%, and mining firms like MARA Holdings and Riot Platforms losing 11%.
• Correlation with equities strengthened, as the Nasdaq and S&P 500 also experienced sharp declines.

According to technical analysis, the overall market cap formed a bear flag pattern, signaling potential price declines (this pattern appears after a sharp drop, followed by a temporary upward channel). If the price breaks below this channel, a further decline is likely.

Source: Emmaculate, published on TradingView, April 3, 2025

Why Bitcoin might bounce back

A note from the bears. Despite the initial sell-off, Bitcoin could see a rebound for several reasons:

• Bitcoin as "digital gold": During economic uncertainty, BTC has historically been viewed as a hedge against inflation and fiat devaluation.
• Institutional movements: Exchange outflows suggest that institutions are holding rather than panic-selling, reducing BTC liquidity and potentially driving prices higher in the future.
• Monetary policy shifts: If the Federal Reserve pivots toward rate cuts or quantitative easing (QE), Bitcoin could benefit from increased liquidity.

BitMEX co-founder Arthur Hayes has argued that such macro conditions could push BTC toward $150,000 in the next cycle.

Do tariffs + the U.S. Dollar = a crypto opportunity?

The impact of tariffs on the U.S. dollar has direct implications for crypto:

• Reduced exports and lower bond demand could weaken the USD over time.
• A weaker dollar typically boosts Bitcoin, as investors look for alternative stores of value.
• Grayscale suggests that Bitcoin could benefit from a fragmented monetary landscape, particularly as central banks diversify reserves away from USD.

Tariffs, regulation & crypto’s role in the financial system

Trump’s policies could indirectly accelerate crypto adoption by:

• Increasing the use of crypto for trade settlements due to currency uncertainties.
• Encouraging alternative reserve assets beyond the U.S. dollar.
• Aligning with a potentially pro-crypto regulatory stance under a second Trump administration.

What should crypto investors do now?

Crypto investors should watch a few key things closely:

• When and how the new tariffs are rolled out, and if any changes are made along the way
• How other countries respond, especially with their own tariffs
• Changes in crypto regulations, as governments adjust to the new economic climate
• How money moves between traditional markets and crypto, which can impact prices and sentiment

• Consider long-term portfolio strategies, as crypto’s role in a shifting financial landscape could strengthen.

Conclusion: Tariffs may hurt now, but crypto could emerge stronger

While recent tariffs triggered a downturn across both traditional and crypto markets, it’s worth noting that this was driven more by uncertainty than fundamentals. As has previously been the case, crypto’s response is often tied to macro trends, with Liberation Day tariffs being no exception. 

The bottom line is that market dynamics are changing. As liquidity patterns shift and capital moves differently, crypto’s role within broader portfolios continues to evolve. While this can have both a positive and negative impact on portfolios, continuing to stay informed is the wisest step one could take. 

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