WalletConnect, as the core connection protocol of the Web3 ecosystem, has performed outstandingly in enhancing user experience and expanding functionality in recent years, but its token economic model, market competition, and security risks still face challenges. The following is a comprehensive analysis from multiple dimensions:

### 🔗 1. Technical Value and Ecological Position

- Core Infrastructure: WalletConnect has achieved secure connections between dApps and wallets through end-to-end encrypted communication protocols, covering over 600 wallets and 61,000 applications, with a cumulative connection of over 275 million times and a penetration rate of over 90%, hailed as the 'TCP/IP protocol of Web3.'

- Function Upgrades: In May 2025, new features such as secure login, transaction signing, and payment will be added, significantly simplifying DeFi and exchange operation processes, which is expected to enhance on-chain activity and liquidity.

### ⚡ 2. Recent Developments and Optimizations

- Improved User Experience: The cryptocurrency checkout optimization plan launched in 2025 reduces payment friction and promotes the popularization of Web3 payments. At the same time, it supports cross-chain interaction (e.g., Ethereum, Solana, and more than 20 public chains), with compatibility leading competitors.

- Tokenization Process: The WCT token will achieve transferability in April 2025, unlocking staking, governance, and DeFi application scenarios, and launching airdrop activities to stimulate community participation. However, its initial circulation rate is only 18.62%, and the price difference between the private placement cost ($0.20) and the opening price ($0.29) is small, leading to concentrated selling pressure.

### ⚠️ 3. Competitive Landscape and Risks

- Direct Competitors:

- MetaMask Snaps: Realizing direct connections to dApps through a plugin system, threatening WalletConnect's role as a neutral connector.

- Native Wallet Integration (e.g., Phantom, Rabby): Some wallets have built-in connection functions, reducing dependence on third-party protocols.

- Indirect Challenges:

- Web2-style login tools (e.g., Web3Auth): Allowing email/social account logins to dApps, reducing the need for traditional wallet usage.

- Cross-chain protocols (e.g., LayerZero): Achieving inter-chain smart contract communication, which may replace the wallet connection layer in the long term.

- Security Vulnerabilities: There have been multiple historical phishing risk records (e.g., cross-site scripting attacks), and the 'what you see is what you sign' mechanism needs to be continuously strengthened.

### 💸 4. Token Economy and Market Performance

- Economic Model Flaws: The initial circulation volume of WCT is low, and the market maker controls (accounting for 8%) lead to drastic price fluctuations. In late May 2025, it experienced a flash crash of 60% ($1.3 to $0.5), exposing liquidity shortages and market manipulation risks.

- Utility Lag: Currently, the main functions of WCT (fee payment, governance) have not yet been fully realized, with an annual income of only $2 million, and a 60 times sales revenue ratio significantly overvalued. Although the staking APY reaches 85%, it relies 50% on inflation issuance, creating a 'mine-extract-sell' cycle.

### 💎 5. Summary and Outlook

WalletConnect's innovations in technical infrastructure and user experience (e.g., payment, cross-chain support) have built a moat for it. If it can optimize the fee tiering model (target annual income of $30 million) and activate token utility in the short term, its valuation may repair to a reasonable range. However, in the long term, it needs to address three major challenges: **insufficient token economic conversion rate** (90% of connections are free), **competition from squeezed protocols** (e.g., MetaMask ecosystem becoming closed), and **security and trust crises** (historical flash crashes and phishing risks). If breakthroughs such as 'fee income exceeding 30%' are achieved in the next six months, it may complete the leap from tool to value gateway; otherwise, it may be trapped in a valuation trap of high FDV and low circulation.