What is WalletConnect Token (WCT)? All you need to know about the native token for the WalletConnect network — WalletConnect Pay

09.16.2024

WalletConnect Token, Company Update

What is WalletConnect Token (WCT)? All you need to know about the native token for the WalletConnect network

The WalletConnect Token (WCT) is integral to the WalletConnect Network — fueling the onchain UX ecosystem by empowering its community of users, apps, and wallets to contribute to a better onchain future through shared incentives. Launching on Optimism’s OP Mainnet, the token will employ Ethereum’s security and OP Mainnet’s speed.

The token has four key functions focused on the long-term sustainability of the network and the enablement of the network’s decentralized infrastructure through governance and other utilities, providing both individuals and organizations with the ability to better shape the user experience standards of web3.

Holders of WCT have a true stake in the future of onchain UX and the opportunity to participate in community-driven innovation that impacts all of web3 across all chains.

With early release of the token taking place late 2024, individuals and organizations that play a key role across the WalletConnect Network can soon begin to contribute more towards building the onchain UX ecosystem, and in turn, realize the benefits and rewards of doing so.

Utility of the WalletConnect Token (WCT)

WCT has four main functions within the ecosystem:

1. Fees

Fees play a crucial role in the long-term sustainability of the network, with the network’s community and contributors having the role of defining and shaping exactly how they will support and drive the network’s economic flow.

Initially, the Network will not employ a fee structure, though when the ecosystem reaches an appropriate stage of maturity, the community may propose, discuss, and decide upon the introduction of fees through governance mechanisms. As such, this means that the timeline for implementing fees is not currently fixed.

The network’s current fee proposal envisions that the relay will adopt a Monthly Active User (MAU) model for its fee structure for the connection service, providing a flexible and scalable solution for managing network usage fees. Participant groups that play important roles within the network will be receiving WCT tokens to prepare them for when this is enabled.

If additional functionality is layered into the Network, new fee models may emerge which will involve fees to be paid in the WCT token.

2. Rewards

17.5% of the initial token supply is allocated to incentivize participants in the WalletConnect Network during its first years. 5% will be distributed in the first year, with 12.5% reserved for subsequent years.

Rewards will be distributed to a variety of community contributors based on varying factors, all determined in line with the network’s values and purpose to enable and drive better onchain UX. For example, through WalletGuide and WalletConnect Certified, wallet providers will have continued incentives to improve the standard of wallets across all of web3 with performance reward mechanisms defined by consensus-based criteria. Node rewards will also take into account performance factors like uptime and latency, encouraging node operators to continually build and optimize infrastructure for usability.

3. Staking

Any holder of WCT has the opportunity to stake their tokens to the network. Staking tokens enables individuals to further contribute toward the stability and sustainability of the network and receive rewards for doing so.

Staking rewards come from a portion of the general reward pool, with the percentage set by governance. Each staker’s rewards are based on their stake weight, which is capped to prevent over-concentration. Rewards increase with longer commitments and larger stakes.

The fixed staking system allows users to lock tokens for periods between one week and two years. During the lock-up period, tokens cannot be withdrawn, and there is a 7-day unbonding process at the end. An auto-locking feature automatically renews staking positions, maintaining stake weight. Manual re-staking is also available, with potential for future automatic re-staking to enhance user convenience.

4. Governance

The governance of the WalletConnect Network is designed to promote decentralization, transparency, and community involvement. The WalletConnect Foundation stewards the Network's growth, supporting stakeholders through grants, application development, and partnerships. Tokenholders will vote on proposals and participate in decision-making through the Network’s governance mechanism.

Allocation of the WalletConnect Token (WCT)

The initial supply of WCT is capped at 1 billion, with allocations designed to support the Network's growth and sustainability. These allocations include:

Token Inflation

In the initial design of the WalletConnect Network's tokenomics, token inflation is not contemplated as a mechanism for token distribution or network sustainability. The current model is intended to focus on utilizing existing token allocations and fee structures to support network operations and incentivize participation.

However, the network's governance structure and community retain the flexibility to implement inflation mechanisms in the future if deemed appropriate.

Transferability of the WalletConnect Token (WCT)

WCT will enter its first release cycle in 2024, and transferability of WCT will be implemented at a later date. Prior to this, token holders can participate in network activity like governance and staking with their tokens, but cannot transfer their tokens to other wallets.

Enabling Transferability

The WalletConnect Foundation will facilitate discussions within the community about the enablement of transferability of WCT, giving token holders the choice and opportunity to determine as and when precisely initial transfer windows will open through governance and voting proposals.