Wormhole, known for bridging assets between blockchains, has refreshed its tokenomics for the native Wormhole (W) token. This update introduces a token reserve funded by protocol revenues and enhanced staking yields, potentially influencing governance.
Announced on Wednesday, the key changes include a W reserve to accumulate protocol fees and revenue, a 4% base staking yield with extra rewards for active participants, and a shift from bulk token unlocks to biweekly unlocks.
The protocol aims to significantly increase asset transfer and messaging volumes over the next year or two, anticipating more tokens to be locked as adoption grows and revenues return to the organization.
Launched in April 2024, Wormhole’s token initially traded at $1.66 but dropped to $0.54 within ten days. The recent tokenomics overhaul sparked a price jump exceeding 6.3%.
Despite positive market response, some users expressed disappointment over the absence of a second airdrop or a buyback-and-burn plan, mechanisms often used to reduce supply and support price growth.
The W token holds governance power, allowing stakers to delegate voting rights for protocol decisions. Currently, $45 million worth of W tokens are staked, with 485 million W tokens participating in governance votes.
Dan Reecer, co-founder of the Wormhole Foundation, wields the largest voting influence with $30.5 million in staked W tokens, accounting for 25.1% of voting power.
Wormhole is competing in the expanding crypto interoperability space, enabling multi-chain asset deployments sought by stablecoin and real-world asset token issuers. Competitors include Chainlink’s cross-chain messaging, LayerZero, and Axelar.
This tokenomics revision underscores Wormhole’s ambition to advance interoperability and ecosystem participation amidst growing market demand for cross-chain functionality.
