- Cross-chain messaging protocol Wormhole is launching a token.
- The move comes after the protocol parted ways with its previous owner, Jump Crypto, in November.
- Futures markets for the new token value it at around $0.5.
After three tumultuous years under the previous ownership of market maker Jump, crypto bridge project Wormhole has joined the growing group of DeFi protocols announcing governance token giveaways — airdrops — to their users.
Wormhole helps separate blockchains send information between each other. The most common application of this technology is bridging — transferring crypto assets from one blockchain to another.
Early-stage crypto projects frequently tease the possibility of airdrops as a strategy to attract users. Users try out these protocols, hoping to receive governance tokens that have the potential to be sold for significant profits.
But Wormhole isn’t an early-stage project, making it an outlier in the time taken to launch its token. Several new crypto projects, such as Celestia, Dymension and Manta Network, launched governance tokens through airdrops at their inception or soon after launching.
Wormhole, on the other hand, operated for over 876 days before announcing an airdrop.
Airdrops also help crypto projects decentralise as users can, in theory, decide the future of a project by participating in governance through these tokens.
For Wormhole, the move towards decentralisation — and liquidity through a token launch — comes at a critical time as the project’s previous owners Jump Crypto, the crypto arm of market maker Jump Trading, parted ways with it in November.
In February 2022, the protocol suffered from a $326 million hack on its Solana leg. Jump replenished the funds from its own coffers — a rare move in an industry rife with hacks that often go uncompensated.
When Wormhole launched in late 2020, just before the last bull market, it was hailed by Sam Bankman-Fried as a pivotal piece of infrastructure for Solana’s success. Before Wormhole, Ethereum DeFi users had to go via FTX to reach Solana.
Wormhole has expanded beyond Solana over the years, and it has facilitated almost one billion messages. These messages facilitate cross-chain transactions such as bridging.
Lots of W tokens for the users
Wormhole appears to have earmarked a hefty token allocation for its users. The token is simply called W, the first letter of the protocol.
The project will distribute 17% of its 10 billion supply to users who have met certain criteria — although Wormhole has not yet revealed what those criteria are.
Of the 17% allocated to its users, Wormhole will distribute 11% at its token genesis event — a crypto-specific term for a token’s creation. Wormhole will distribute the remaining 6% four months later, in accordance with the protocol’s token release schedule.
Other recent airdrops have allocated varying amounts of tokens to their respective communities. Modular settlement layer Dymension allocated 8% of its token supply to a recent airdrop, while Solana decentralised exchange aggregator Jupiter plans to eventually distribute 40% of its JUP token to users.
Decentralised exchange Hyperliquid has already listed perpetual futures for W, allowing traders to speculate on the token’s price ahead of its launch. W currently trades for around $0.5, implying a fully-diluted value of $5 billion.
Wormhole said that it had taken the snapshot — a log of which crypto wallets will be eligible to claim tokens — before posting the blog post announcing it today.
The Wormhole DAO
W will govern the Wormhole DAO, a digital cooperative of token holders who will eventually be responsible for various aspects of the protocol’s management.
Immediately after the token launch, onchain governance will largely guide community programs and treasury-related activities, Wormhole said.
However, over time, token holders’ responsibilities could extend to adding and removing blockchain connections to Wormhole, upgrading the protocol’s smart contracts, and adjusting fees, among other things.
In addition to distributing tokens to its community, Wormhole will also allocate 5.1% to those running Guardian Nodes — the software that verifies the messages sent through Wormhole.
Another 12% will go to core Wormhole contributors, 31% to developing the Wormhole ecosystem, 11.6% to strategic network participants, and 23.3% to the Wormhole DAO treasury.
DAOs are a popular governance method for DeFi protocols. Tradable tokens are distributed to community members, who then create proposals and vote on them, guiding a protocol’s development in a decentralised manner.
The biggest DeFi protocols in crypto — such as liquid staking provider Lido, decentralised exchange Uniswap, and lending protocol Aave — all operate through DAO structures.
Ekin Genç is DL News’ managing editor. Tim Craig writes about DeFi. Have a tip? Contact the authors at ekin@dlnews.com and tim@dlnews.com.