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WCT Token

The WCT token powers the onchain UX ecosystem, acting as both a reward and governance mechanism within the ecosystem.

Token Functions​

The WCT token has four primary functions within the WalletConnect Network:

  1. Fees: At first the Network will not charge fees, but token holders will have the ability to vote on fees being charged for Network services such as relay usage and other future services.
  2. Rewards: WCT tokens are distributed as rewards to incentivize participation and contribute to Network security and efficiency.
  3. Staking: Participants can stake WCT tokens to earn rewards and participate in governance.
  4. Governance: WCT holders can vote on proposals and changes, giving the community control over the Network's development through decentralized governance.

Token Transferability​

At launch, the WCT token will be non-transferable for all holders. This means that token holders will not be able to transfer their tokens to other wallets or addresses. However, this restriction does not affect then-enabled utilities of the WCT token such as governance participation and staking capabilities, allowing all users, regardless of their allocation conditions, to participate in governance and staking activities.

The rationale behind this initial non-transferability is multifaceted:

  1. Network Functionality: The purpose of the WCT token is to support and enable network functionality. By restricting transferability, the tokens will remain within the ecosystem to serve their intended purpose.

  2. Long-Term Focus: This approach prioritizes the long-term development and stability of the WalletConnect Network. Non-transferability provides an opportunity to thoroughly test all token functionalities, including staking, governance, and mechanisms.

  3. Ecosystem Development: This short-term non-transferability period serves as the starting point for creating and nurturing the WalletConnect ecosystem, allowing participants to engage with the Network's core functionalities.

  4. Infrastructure Protection: As a key piece of web3 infrastructure, the WalletConnect Network must be stable and secure. This non-transferability period mitigates potential risks associated with premature token liquidity.

It is expected that the WalletConnect Foundation will facilitate the token holder community to propose and vote on when transferability will be enabled. The decision to enable transferability will be based on community-agreed milestones and will be subject to a governance vote. This process ensures that the transition to full token transferability is made at a time when it best serves the Network's interests and aligns with its development goals.

By taking this measured, community-involved approach, the WalletConnect Foundation aims to build a robust, secure, and sustainable ecosystem that serves the long-term interests of all participants in the WalletConnect Network.

Rationale for Non-Transferability​

  • Network Functionality: Ensures tokens remain within the ecosystem to serve their intended purpose.
  • Long-Term Focus: Prioritizes the development and stability of the WalletConnect Network.
  • Ecosystem Development: Nurtures the WalletConnect ecosystem by allowing participants to engage with core functionalities.
  • Infrastructure Protection: Mitigates potential risks associated with premature token liquidity.

It is expected that the WalletConnect Foundation will facilitate the token holder community to propose and vote on when transferability will be enabled.

WCT Allocation​

WCT Allocaitos

The initial supply of WCT tokens is capped at 1 billion, with the following allocations:

  • WalletConnect Foundation: 27%
  • Airdrops: 18.5%
  • Team: 18.5%
  • Rewards: 17.5%
  • Previous Backers: 11.5%
  • Core Development: 7%

Tokens allocated to core development, team and previous backers will be subject to a 4-year unlock including a 1 year cliff starting at the token generation event (TGE).

Token Inflation​

The initial design of the WalletConnect Network's tokenomics does not include token inflation. The current model focuses on utilizing existing token allocations and the potential to introduce fee structures to support Network operations and incentivize participation such that inflation is not envisioned within the first 3-4 years.

However, the Network's governance structure and community retain the flexibility to implement inflation mechanisms in the future if deemed appropriate. Any decision to introduce inflation would be subject to careful consideration of Network metrics, participant feedback, and overall ecosystem health, with specific parameters to be determined through Network governance processes.

Token Flow​

Initially, applications and SDKs will not be charged fees by the Network for using the relay services. However, given there is a cost to provide this service in a privacy-preserving and censorship resistant way, it may be necessary, when the ecosystem reaches an appropriate stage of maturity, that the introduction of fees could be proposed by the community, discussed, and decided upon through governance.

The simplified token flow within the WalletConnect Network follows these steps:

  1. A user initiates a connection with an app.
  2. The user connects with the relay to establish the connection.
  3. Once the connection is established, the relay facilitates communication.
  4. Each message relayed has an associated price, which the app or SDK pays in fees.
  5. The collected fees are used to reward nodes and wallets for their work in maintaining the Network.
  6. This process repeats for all messages conveyed through the Network.

Note that the mechanism for charging fees is intended to ensure that the end user does not have to pay to make a connection and has no other friction added to their user experience.