How does wrap.near contract operate in NEAR Protocol?

It seems wNEAR is baked by wrap.near contract, but how does it work?

Solution

wrap.near holds w-near contract, which is FT [fungible token] implementation based on NEP-141 standard.

The idea is simple, you send native NEAR tokens and the contract keeps track of the balance of the sender account in its local storage, and there is a reverse operation which allows you to instruct the contract to send NEAR tokens back.

This FT always matches native NEAR token 1:1. "Wrapped" prefix in the name (wrapped NEAR or wNEAR) implies that it just turns native token into FT token. It was created to be compatible with Rainbow Bridge (Aurora) interfaces which allows to transfer FT across NEAR network <> Ethereum network (by locking the tokens in a contract on one network and unlocking the equivalent amount of tokens from a contract that is deployed on the other network).

So getting back to the technical implementation of w-near contract, you can find three core methods:

near_deposit expects NEAR native tokens attached to the function call, and those attached tokens will be deposited to wrap.near account, and in exchange the contract implementation will save a record in the storage that those tokens belong to the account that sent them
near_withdraw deducts the amount of tokens recorded for the account that called this function and sends a transfer of native NEAR tokens back to the caller
ft_transfer (it is implemented by near-sdk-rs helper) virtually transfers the wNEAR FT tokens by updating the records inside the contract storage. NOTE: there is no native transfer involved here, so the transaction will go from tokens sender to wrap.near contract, which will update the balances of the sender and receiver accordingly, and the receiver account will never receive a native NEAR call or NEAR tokens (until he/she calls near_withdraw)