During an Initial Coin Offering (ICO) that concluded in January 2023, Wormhole raised $225 from investors including Coinbase Ventures, Multicoin Capital, Jump Crypto, and other prominent Web3 venture capitalists.
Thirteen months later, the startup has unveiled the tokenomics and release schedule for “W” – a governance token that will determine the Wormhole cross-chain interoperability protocol’s future direction.
On Wednesday, February 8, wormhole announced that a maximum supply of 10 billion W coins will be distributed across six stakeholder groups. W will be minted as ERC-20 tokens on Ethereum and SPL tokens on Solana.
Representing the largest allocation category, “strategic contributors” will receive 31% of W tokens to help incubate and grow the broader Wormhole ecosystem.
The largest single recipient of W will be the Wormhole Foundation Treasury, which has been allocated 23.3% of the total supply.
Wormhole investors who participated in the ICO will receive 11.6% of all W. Meanwhile, 17% will go to stakeholders categorized as “community,” 12% will go to core contributors, and 5.1% to Wormhole validators known as Guardian Nodes.
As has become standard practice for crypto projects, the release of W tokens will be staggered.
During an initial token generation event (TGE), 18% of the total supply will be released while the remaining W will remain vested for up to 56 months. Guardian nodes and strategic investors won’t be included in the initial TGE but will start receiving W after a year.
Wormhole has yet to confirm a date for the TGE. At the time of writing, the firm had not responded to CCN’s inquiry.
Once the first W tokens have been issued, holders will form a decentralized autonomous organization (DAO) with voting power equivalent to each party’s share of the total supply.
Initially, on-chain governance will be limited to community programs and treasury-related activities, but Wormhole (the company) will retain control over the actual protocol.
However, the firm committed to “progressively decentralizing the protocol’s governance to W holders.”
“Over time, it is expected that the DAO will take more responsibility for many decisions and actions,” it added. This includes responsibility for upgrading smart contracts, adding and removing blockchain connections, adjusting fees and amending token utility.
Going forward, the announcement said that a decentralization roadmap will be developed with input from Wormhole Core Contributors and the community.
Upon announcing its latest plans for W, Wormhole boasted about the cross-chain bridging solution’s growth in the past 2 years, which has seen the ecosystem expand to support more than 200 decentralized apps spread moving assets across over 30 blockchains.
The company proudly declared that Wormhole has handled over 950 million multichain messages since its inception. And in 2023, it was named as the only unconditionally approved cross-chain protocol for use by the Uniswap DAO.
Given all the good news, the firm seems to have moved on from 2022’s devastating hack, which saw assets worth more than $320 million stolen from Wormhole’s Solana–Ethereum bridge.
But investor’s memories aren’t that short. While a recent Keyrock report found that Wormhole bridges accounted for 53% of the movement of funds between Ethereum and non-EVM blockchains, it acknowledged that a “pervasive wariness towards bridges” remained.
In the end, fear that the network might suffer a repeat of the Solana–Ethereum incident might prevent Wormhole from ever fully relinquishing control to the DAO.
Between centralized control and full decentralization, platforms like Polkadot have opted for a middle path, with a select committee known as the Council retaining the power to overrule the DAO is circumstances demand it.
Polkadot’s approach is designed as a kind of safety measure – allowing a small group of individuals to act quickly in the event of a worst-case scenario. Given Wormhole’s troubled past, implementing a similar design has its appeal. But as the project evolves, W holders will surely forge their own path to decentralization.