Wormhole, as an interoperability protocol that facilitates asset transfers between blockchains, has announced an update to the tokenomics of its native Wormhole (W) token, including token reserves and providing more rewards for stakers. These changes may impact the governance of the protocol, as staked Wormhole tokens will allocate voting power to representatives.
According to a Wednesday announcement, the Wormhole token will see three major changes: a W reserve funded by protocol fees and revenue, a base yield of 4% for staking, and higher rewards for active ecosystem participants, as well as a shift from bulk unlocking to bi-weekly unlocking.
"The goal of Wormhole contributors is to significantly expand the volume of asset transfers and messaging facilitated by Wormhole in the next 1-2 years," the protocol stated. According to Wormhole, as adoption increases and revenue flows back to the company, more tokens will be locked.
Wormhole was established at the end of 2020, initially as a bridge for transferring tokens between Ethereum and Solana, and launched its native token on April 3, 2024.
The token debuted at a trading price of $1.66 but plummeted to $0.54 within about 10 trading days. Following the revision of the tokenomics on Wednesday, the token price surged over 6.3%.
Wormhole's announcement garnered significant attention on the X platform, although some users expressed disappointment over the lack of a second airdrop or buyback-and-burn mechanism in the roadmap. These mechanisms are typically used to reduce token supply in hopes of driving up its price.
Wormhole's new tokenomics may affect the governance of the protocol. The W token serves as a governance mechanism: when users stake their W tokens, they can delegate power to representatives, who then vote on the operation of the protocol.
Currently, $45 million worth of W is staked, and 485 million W has been used for voting.
Dan Reecer, co-founder of the Wormhole Foundation, holds the most significant influence over the protocol's governance, having staked $30.5 million worth of Wormhole, which accounts for 25.1% of the voting power.
Cointelegraph has reached out to Wormhole for comments but has not received a response as of the time of publication.
Interoperability protocols like Wormhole are at the center of increased attention in the cryptocurrency space this year: the ability to launch assets across different blockchains and ecosystems.
This functionality is particularly beneficial for stablecoin and RWA token issuers who need to deploy assets across multiple chains.
Some of Wormhole's competitors include cross-chain messaging service Chainlink, omnichain deployer LayerZero, and interoperability protocol Axelar.
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Original article: “Wormhole (W) token soars after tokenomics overhaul and reserve launch”
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