I can't actually see the damage, but that might be my eyes or the photo...
You can wrap them in electrical tape to reduce any risk of shorts from a damaged wrapper. My understanding is that when they vent, they do it from the top or the bottom, so no risk in making a DIY pipe bomb. I suppose it would keep the battery warmer, which in most climates isn't going to help its lifespan.
People wrap them up for tube mods to stop them rattling. I personally wouldn't there, because it reduces the ability of the mod to vent gasses. Not a concern in a box mod.