WCT Series (14): Token Unlocking Period for Team and Early Supporters
In the token distribution of WalletConnect, the portions for the team and early supporters are always intriguing, especially regarding the design of their unlocking periods. The team holds 18.5%, while early supporters hold 11.5%, totaling 30%, but they cannot withdraw it immediately; instead, there is a strict 4-year unlocking period, with a 1-year cliff lock. Starting from the Token Generation Event (TGE), nothing can be moved in the first year, and then it is gradually released linearly.
Why is it designed this way? Primarily to align interests. The team consists of core members of Reown and WalletConnect, who have been promoting the protocol's development since 2018. Without them, there wouldn't be today's 150 million connections. If the unlocking is too fast, it could lead to short-term cashing out, affecting network stability. The cliff period acts as a test, ensuring that they are fully committed for at least a year. The same goes for early supporters; they provided resources to help the network get started, and this acknowledges their contributions, but they also have to wait to ensure everyone is focused on the long term.
In practice, this mechanism is quite common in Web3 projects and can prevent liquidity shocks. Once unlocked, tokens can be used for staking or governance, but initially, they cannot be transferred, further locking in the internal circulation of the ecosystem. The foundation will assist the community in proposing when to open transfers, but it is contingent on the maturity of the network. Imagine if the team can transition the network from permissioned to permissionless over these years; then the value of these tokens would be more than just simple numbers.
Personally, I believe this reflects WalletConnect's community orientation. It's not about making a few people rich first, but about allowing the entire ecosystem to grow synchronously. In the future, if governance voting adjusts the unlocking details, it will be more flexible, but the core is to protect user interests.
