Solving the Tragedy of the Commons in Web3
How do you fund a public good in a decentralized world? This is one of the most critical and unsolved questions in Web3. Many protocols that provide essential infrastructure do so for free, risking the "tragedy of the commons," where the resource is overused and under maintained because no one is paying for its upkeep. The @WalletConnect Network, which has annual operating costs of over five million dollars, has devised an innovative solution to this problem. It is pioneering a "freemium" public good model, a sustainable economic engine designed to keep the core protocol free for the vast majority of users while ensuring its long term financial health. This approach is not just a business model; it is a sophisticated economic architecture that leverages the network's most successful participants to subsidize the infrastructure for everyone else. This model is crucial for maintaining the network's core principles of being privacy preserving and censorship resistant, as it avoids the need to monetize user data or gatekeep access. The WCT token is the linchpin of this entire system, providing the mechanism for both governance and the future implementation of this fee structure.
A Freemium Approach: Free for the 99%
The core philosophy of the WalletConnect Network is that basic, secure interoperability should be a free and accessible right for every user and developer in Web3. To uphold this principle, the network's relay services and APIs are provided completely free of charge for 99% of its users. This includes individual users, small development teams, and emerging projects who can build and innovate on the network without facing a financial barrier. This strategy is crucial for fostering a vibrant and permissionless ecosystem, encouraging experimentation, and ensuring that WalletConnect remains the default, go to standard for connectivity. By removing the cost friction for the long tail of the market, the network maximizes its adoption and solidifies its powerful network effect. This approach is analogous to the open source software movement, where foundational tools are made freely available, allowing a massive ecosystem of innovation to be built on top of them. The WCT token is central to this, as it will be used in the governance process to ratify and refine this economic model over time, ensuring that the community has the final say on how the network is sustained.
The 1% Rule: Power Users Sustain the Network
The financial sustainability of this model is built upon the "1% rule." While the network is free for the majority, the top 1% of commercial power users, such as major exchanges or high traffic dApps with over a million daily users, require a higher level of service. These entities need significantly higher API rate limits, dedicated infrastructure for lower latency, and advanced analytics to support their large scale operations. For these enterprise grade needs, WalletConnect offers a paid "Verified API" tier. This freemium structure ensures that the participants who derive the most commercial value from the network's scale and reliability are the ones who contribute to its operational costs. This is a fair and equitable model, similar to how a public highway system is funded. While everyday drivers use the roads for free, commercial trucking companies, which use the infrastructure more intensively and for commercial gain, pay tolls and taxes that help maintain the system for everyone. This ensures that the public good remains available to all, while those who benefit most from it contribute proportionally to its upkeep.
How MAU Based Fees Create a Demand Loop for WCT
The proposed fee structure for this premium tier is based on Monthly Active Users (MAU). This B2B model is elegant because it scales directly with the value an application is receiving; the more users an app brings to the network, the more it contributes. Crucially, these subscription fees will be paid in $WCT tokens. This design choice is the key to creating a sustainable, non speculative demand loop for the token. As the Web3 ecosystem grows, the number of large scale applications will increase, and so will their need to acquire $WCT to pay for their infrastructure needs. This directly links the token's utility and demand to the real world growth and adoption of the #WalletConnect network. The entire mechanism is designed to be ratified by a community governance vote, ensuring that the transition to a fee based model is transparent and aligned with the ecosystem's long term interests. This creates a powerful economic flywheel: as the network grows, the demand for $WCT increases, which in turn provides the resources to further improve and expand the network, creating a virtuous cycle of growth and sustainability.
The Long Term Vision: A Self Sustaining Protocol
The ultimate goal of this freemium model is to create a protocol that is economically self sustaining, independent of any single source of funding. By generating revenue from its most intensive users, the network can cover its operational costs, fund ongoing development, and reward its community of node operators and contributors indefinitely. This is a crucial step in its journey toward becoming a true digital public good. A protocol that relies on grants or venture capital funding will always be subject to the priorities and influence of its funders. A protocol that can fund itself through its own utility, however, can remain truly neutral and aligned with the interests of its users. The MAU based fee model, governed by the WCT token holders, provides a clear and credible path to achieving this long term vision of a self sustaining, community owned, and universally accessible communication layer for the entire decentralized internet.
“This article is for informational purposes only and does not constitute financial advice.”
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