Okay, wrapped asset discussion time, particularly about wrapped XMR.

I'm actually somewhat interested in wrapped assets, but they have their own risks you need to know about.

First: they are almost always centrally controlled.

If the controller steals your funds, they're gone.
If they secure your funds poorly, they're gone.
If they block redemption for any reason, your funds are gone.

Second: wrapped XMR has different (worse) privacy than XMR

Wrapped XMR is usually on Ethereum. Ethereum is highly transparent. Thus people can see when you move this wrapped asset around

People can see when you trade. They can see when you purchase. They can see when you redeem

Third: you're subject to the controller's policies.

If they need KYC to buy or redeem, you must provide.
If they charge a fee in the future, you must pay.
If they halt all transactions, you can't send another one.
If they start using a fractional reserve, what can you do?

Fourth: you must ALSO trust the other network's security parameters.

If Ethereum or whatever other chain dies, your asset also could die.
If the smart contract has an issue, you're funds could be gone.

You basically are giving full and complete trust to the issuer of the wrapped asset (and the network it's on!) that they protect your funds appropriately and don't try to mess with you. You MUST trust them.

Wrapped assets aren't all dreary though. In theory, they allow for people to interact on other platforms while still keeping their positions in their desired asset (indirectly and subject to the additional risk described above).

These other platforms may have more advanced, built-out trading, borrowing, and lending tools. They might be faster. They might be cheaper (though not really the case for Ethereum at the moment, haha).

Good wrapped assets solve for desired use-cases today that aren't as convenient to do on the main chain itself. This could be a temporary thing (where the feature simply isn't built out or added yet), or it could be purposeful (eg: Monero not making everything transparent).

In summary:

Wrapped assets are risky and require trust.
They also could provide more flexibility.

Where this flexibility has a market demand, these wrapped assets fill a necessary niche.

That's a good thing as long as you TRUST the issuer and the network you are using.