# Shielding Tokens (Wrapping)

Shielding converts regular ERC-20 or ETH into confidential tokens (cTokens). This is how users obtain encrypted balances while preserving ERC-20-like functionality.

Although technically a “wrap,” **shielding** better conveys the privacy aspect.

## **How Shielding Works: Step-by-Step** <a href="#how-shielding-works-step-by-step" id="how-shielding-works-step-by-step"></a>

1. **Check if** **a wrapper exists** for your token
   * Each token has a dedicated wrapper contract.
   * If it exists → use it.
   * If not → anyone can deploy one (see Section 6).
2. **Approve the wrapper** (for ERC-20 only)
   * Grant the wrapper permission to transfer your tokens
   * `token.approve(wrapperAddress, amount)`
3. **Call the shield function**
   * `wrapper.wrap(recipientAddress, amount)`
   * For ETH: Include the amount as `msg.value`
   * For ERC-20: Tokens are transferred from you
4. **Pay shield fee**
   * Fees are paid in the original token (eg, USDC, ETH…), not in cTokens. This ensures accurate protocol revenue accounting and avoids circular dependencies.
   * The fee is calculated as a percentage (basis points) of the amount
   * All [fees](/wiki/zaiffer/protocol-fees.md) are sent to the protocol fee recipient address (configured in the FeeManager contract). This address is publicly visible on-chain.
5. **Receive confidential tokens**
   * Wrapper mints cTokens to your address
   * Your balance is encrypted as `euint64`
   * Amount is immediately usable for confidential transfers

**Shield Flow Diagram:**

<div data-with-frame="true"><figure><img src="/files/euStGkq0THB11cE3GIck" alt=""><figcaption></figcaption></figure></div>


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