As the digital economy and web3 evolve, tokenomics, the economic systems governing cryptocurrencies, have become the lifeblood of decentralized ecosystems. WalletConnect Token (WCT) introduces advanced tokenomics to power the WalletConnect Network’s transition into a decentralized, user-owned infrastructure.
This framework balances usability, governance, and incentives, ensuring sustainable growth and alignment with the principles of decentralization.
The Core Pillars of WCT Tokenomics
WCT is the engine behind the WalletConnect Network, driving its evolution and utility. Its tokenomics rest on four core pillars:
- Staking: Participants lock WCT to secure the network, earn rewards, and contribute to governance.
- Rewards: A significant portion of the token supply incentivizes contributors, from node operators to wallets and applications.
- Governance: WCT holders vote on proposals, fee structures, and technical upgrades, shaping the network’s future.
- Fees: Anticipated token-based fees for services such as relays will sustain the ecosystem and reward contributors as the network matures.
What is WCT Utility?
WCT serves as the backbone of the WalletConnect Network, offering utility across the ecosystem. At its core, WCT is a token of participation, governance, and sustainability. Users use WCT for staking to secure the network, earning rewards while actively contributing to its stability. Beyond staking, WCT is the key to decentralized governance, enabling token holders to propose, debate, and vote on critical decisions, from technical upgrades to fee structures. Additionally, WCT will power essential network services, such as relays, through token-based fees, creating a self-sustaining economic loop. This multi-dimensional utility is designed so that WCT not only drives network functionality but also empowers the community to shape its future.
WCT Allocation: Built for Longevity
The fixed supply of 1 billion WCT tokens reflects a long-term strategy to balance ecosystem growth with decentralization. The allocation contemplates alignment with the network’s goals:
- Core Development: 7% for network advancements.
- Rewards: 17.5% to incentivize participants over several years.
- Airdrops: 18.5% to seed adoption among users, wallets, and apps.
- Team and Backers: 30% to support early development and drive adoption.
- Foundation: 27% for partnerships, grants, and ecosystem operations.
This distribution structure not only nurtures the ecosystem but also aligns incentives with the broader decentralization vision.
Staking and Incentives: A Commitment to Long-Term Security
Staking is central to WCT tokenomics, incentivizing participants to secure the network while earning rewards.
- Stake Weight: Participants can stake WCT for up to 4 years, with longer commitments earning higher stake weights. This weight determines governance influence and reward shares.
- Node Rewards: Service nodes, critical to operations, are rewarded based on performance metrics like uptime and latency. Slashing mechanisms incentivizes reliability by penalizing poor performance.
- Wallet Rewards: Wallets integrating WalletConnect are incentivized to deliver superior user experiences, earning enhanced rewards for innovation and adoption.
Governance: Shaping the Network’s Future
- Proposals & Discussions: While only space members can submit proposals on Snapshot, any community member can engage in discussions on Discourse, shaping the direction of governance.
- Decision-Making Scope: stWCT holders (those with actively staked WCT) contribute to network development, including areas such as:
- Technical upgrades and protocol improvements
- Economic discussions, including fees and reward distribution
- Operational standards for service nodes and relay performance
By placing governance in the hands of its users, WalletConnect fosters a resilient, community-driven approach to building the decentralized network.
Sustainability Through Fees
Although the network currently operates without fees, WCT tokenomics anticipate introducing fees to ensure sustainability as the ecosystem matures.
- Purpose: Fees paid in WCT will support essential services such as relay infrastructure.
- Design: To minimize friction, fees will primarily be borne by applications and wallets, ensuring the best onchain UX.
This fee structure supports the ecosystem’s long-term health while maintaining accessibility for end users.
Non-Transferability: Stability Before Liquidity
Initially, WCT tokens are non-transferable to prioritize stability and ecosystem development. This approach:
- Keeps tokens within the ecosystem for staking and governance purposes.
- Mitigates risks of premature liquidity and market volatility.
- Prepares the network for a robust, user-driven future.
Transferability will be activated through governance, empowering the community to decide when the network is ready.
Equations Driving Tokenomics
The advanced tokenomics of WCT are underpinned by mathematical equations designed for fairness and scalability.
Reward Calculation
Staking rewards come from the Reward Pool, governed by a total rewards budget
RG(t) and staking rewards budget RS(t)
Where WS is a predefined weight range (0.25–0.66), determined by governance.
Stake Weight Distribution
Each staker i has a stake-weight w(i,t), calculated as a proportion of the total stake-weights
To prevent over-concentration, a cap cMAX is applied
Individual Rewards
The rewards for each staker are calculated as:
rS(i,t)=sstWeight(i,t)⋅RS(t)
This designs rewards to be proportional, fair, and aligned with governance-determined parameters.
The Road Ahead
WCT’s tokenomics reflect WalletConnect’s commitment to decentralization, sustainability, and community empowerment. As the network progresses toward a permissionless infrastructure, WCT will drive innovation and collaboration across the web3 ecosystem.
WalletConnect is more than a network it’s a vision for the future of the decentralized connectivity. Through WCT tokenomics, users, developers, and stakeholders collectively shape the next generation of web3 connectivity.