Worldcoin Token Economics Released: How to Allocate and Release?

Source: Worldcoin

Compiled by: Karen, Foresight News

Worldcoin today officially announced that the Worldcoin protocol, World ID, WLD token, and World App are now available globally (in legally permitted regions). Subsequently, several exchanges, including OKX, Bitget, and Binance, have announced the listing of WLD.

Foresight News has compiled the tokenomics distribution and release model of Worldcoin for readers' reference.

WLD Tokenomics Distribution Model

Worldcoin (WLD) is an ERC-20 token on the Ethereum mainnet, and individuals can receive their user grants on the Optimism mainnet. Therefore, most WLD transactions are likely to occur on the Optimism network. If needed, the tokens can be bridged back to Ethereum via Optimism.

Within 15 years of the token launch, the initial supply cap of Worldcoin is set at 10 billion tokens (enforced by the WLD smart contract). After 15 years, users can decide through governance whether to enable an inflation mode, with a maximum annual inflation rate of 1.5%. The maximum circulating supply at launch will be 143 million WLD, of which 43 million WLD is allocated to users who verified using the Orb during the project's Pre-Launch phase, and 100 million is lent to market makers operating outside the United States (the loan matures in 3 months).

The Worldcoin tokenomics model is as follows:

• 75% allocated to the Worldcoin community, with most tokens distributed to users, and some tokens allocated to ecosystem funds and network operations. The foundation will manage the distribution of these tokens according to its corporate charter and authorize a gradual decentralization of token management decision-making governance;
• 9.8% allocated to the initial development team, with Tools for Humanity (TFH) and other service providers taking initial steps to develop Worldcoin. TFH currently serves the Worldcoin Foundation and operates World App; (the allocation ratio is inconsistent in the chart and article)
• 13.5% allocated to Tools for Humanity investors. TFH investors provided funding that enabled TFH to support the multi-year pre-launch phase of the Worldcoin project;
• The remaining 1.7% will serve as reserves for TFH. After launch, TFH will retain a reserve of 170 million WLD. (the allocation ratio is inconsistent in the chart and article)

It is worth noting that Worldcoin announced in 2021 that the token allocation to TFH and the initial development team was 20%, and the latest white paper has increased this allocation to 25%. Worldcoin explained that responsibly developing and launching the network is more complex and costly than TFH initially anticipated.

Before Worldcoin achieves decentralization and self-sufficiency, the Worldcoin Foundation will support the Worldcoin ecosystem and will primarily allocate community tokens to:

User grants (≥ 60%), including genesis grants (25 tokens), Welcome Grant incentives received after verifying with the Orb (1 WLD, decreasing over time), and regular grants, etc.

Network operations (≤ 10%), initially focusing on developing incentives for Orb manufacturing, Orb operations, market operation support, bug bounty programs, etc.; after the transition phase, all operator rewards are expected to be paid in WLD. During the transition phase, some operator rewards will be paid in USDC.

Ecosystem fund (≤ 5%), including protocol development, Orb development, standard setting, auditing and certification, ecosystem grants, incentive programs, liquidity provisioning, and foundation operations.

Among them, World Assets Ltd. has signed loan agreements with five market makers operating outside the United States. These five entities received a loan of 100 million WLD within three months after the token launch. At the end of the three months, each entity must repay its loan or may choose to purchase any amount of tokens, up to the amount of the loan received. The purchase price of WLD will be set according to the following formula: 2.00 + (0.04 * X), where X equals the number of tokens purchased divided by one million.

The Worldcoin Foundation has established an ideal token distribution target, as shown in the figure below:

WLD Release Model

Regarding the WLD release model, the two most important points are:

• Team and investor tokens are locked at release;
• Tokens claimed by users will not be locked.

The maximum circulating supply at launch will be 143 million WLD, of which 43 million WLD is allocated to users who verified using the Orb during the project's Pre-Launch phase, and 100 million is lent to market makers operating outside the United States (the loan matures in 3 months). Worldcoin states that during the release week, the number of tokens allocated to users is expected to increase significantly, as new and existing Orb verification users will be able to apply for a 25 WLD genesis grant.

The following figure shows the WLD unlocking schedule for the next 15 years. After that, the release rate of WLD tokens allocated to the Worldcoin community will be determined by governance, depending on factors such as the growth rate of Worldcoin users.

Note: This figure shows the earliest unlocking status of all tokens.

The unlocking schedule for tokens allocated to the community is enforced by four smart contracts. Tokens allocated to users and operators will not be locked.

The table below shows the unlocking status of community tokens during each specified time period, with the same number of tokens unlocked each day within each period.

Tokens allocated to TFH investors will be contractually locked for 12 months after these investors exercise their respective token warrants, and then will unlock daily on average over the next 24 months.

For tokens allocated to the initial development team, tokens already allocated to previous and current team members will be contractually locked for 12 months after release and then will unlock daily on average over the next 24 months.

Tokens allocated to TFH reserves will also be contractually locked, for at least as long as the lock-up period applicable to TFH investors and team members. The exact lock-up period will depend on the timing of these tokens' allocation.

WLD Utility and Distribution Goals

Worldcoin states that its Pre-Launch phase lasted from May 2021 to July 2023. During this period, over 2 million people verified their World ID on Orbs in more than 30 different countries. More than 430 tokens have been allocated to these users before the launch. At launch, Worldcoin will increase the number of Orbs to 1,500 to meet global demand for World ID.

The Worldcoin Foundation will manage the project and strive to gradually decentralize governance and the ecosystem, providing most of the WLD token supply to participants in the Worldcoin protocol. The entity responsible for the distribution of WLD tokens is World Assets Ltd., a subsidiary of the Worldcoin Foundation.

Worldcoin states that WLD is designed as a utility token with governance attributes. In addition to the traditional "one token, one vote" governance mechanism, the introduction of World ID paves the way for a "one person, one vote" mechanism. These two mechanisms can be combined in various ways to achieve new governance methods.

After the token launch, the Worldcoin Foundation will solicit proposals and work with the community to discuss how World ID and WLD tokens interact within the Worldcoin governance model.

Other use cases include users potentially deciding to use WLD tokens to pay for certain operations in World App or other wallet applications, make other payments (e.g., remittances, tipping artists, buying and selling goods and services). Worldcoin states that in the long run, WLD tokens can also be viewed as a global store of value.