Wormhole rolls out strategic W token reserve funded by onchain and off-chain protocol revenue

Decentralized blockchain bridge Wormhole is updating how its tokenomics works, adding a new reserve to protect the long-term value of its W token.

This new strategic Wormhole Reserve will accumulate and lock up onchain and off-chain protocol revenue into a W reserve. The reserve will "channel" revenues across the ecosystem, including the Wormhole protocol, Wormhole cross-chain Portal, and other applications, according to an announcement on Wednesday.

Additionally, the team is increasing opportunities for yield generation, specifically for holders who contribute to governance and use Wormhole's apps. The tokenomics plan will keep staking as a "variable reward," but also boost earnings for "active users of ecosystem applications."

Notably, users of the Wormhole Portal — a multi-blockchain bridge that connects dozens of networks like Ethereum, Cosmos, and Solana — will accrue points that can boost staking yields. The team is targeting a 4% base yield on W.

"Yield will come from a combination of the existing token supply and protocol revenues. There is no inflation being introduced to W. The total supply remains capped at 10 billion tokens," the team noted. "Future protocol revenue ensures that as Wormhole grows, W token holders grow with it."

Beginning in October, Wormhole's W 2.0 Tokenomics will also replace its existing annual cliffs, which released large amounts of W all at once, with smaller and more regular bi-weekly token unlocks that reduce market pressure.

"The W token distribution schedule set in the early days of Wormhole (~2021) was designed at a time when annual cliff unlocks were a common industry standard," the team wrote. "Wormhole is now adopting a modernized distribution schedule designed to maximize stability, strengthen long-term alignment, and provide greater confidence for token holders."

The updated cliff schedule will impact "guardian nodes," community token holders, and other strategic network participants, while the Wormhole Foundation's treasury will retain its 4-year schedule. Likewise, core contributors' tokens will "remain time-locked under contractual safeguards."

Less than half of the total W token supply, about 4.7 billion tokens, is currently in circulation, out of its capped maximum of 10 billion. W is up over 7% at press time, trading around $0.093, according to The Block's price page .