The dWallet Network token (DWLT) is a significant component of the dWallet Network - revolutionizing access control within the Web3 ecosystem through a secure, proof-of-stake, composable modular signature network. As we prepare for the mainnet launch, a comprehensive examination of these token mechanisms will be shared, offering deeper insights into the strategic considerations that shape them. This initial post provides some clarity around the initial allocation of dWallet Network tokens, and discusses how incentives can be aligned while the dWallet Network and ecosystem are further developed and fostered in the first few years, setting the stage for a community-driven future evolution of the token's governance and utilization.

Considerations

The design of the dWallet Network token is shaped by the need to power a composable modular signature network, that is secured by a proof-of-stake consensus. Token holders are generally aimed to be: (i) Users of the dWallet Network, (ii) Participants — node runners who participate in the dWallet Network consensus and in the MPC process for generating the dWallet Network share signature, and (iii) Developers building applications and infrastructure that is powered by and/or utilizes dWallets.

The dWallet Network tokens serve a main utility purpose within the dWallet Network as follows: (i) Fees — any action within the dWallet Network (e.g. creating a new dWallet or generating a signature) must be paid for with the token, (ii) Security — the token is used as part of the Proof of Stake mechanism of the network, and (iii) governance — the token is used for voting as part of the protocol.

Mechanisms for fee structure and token minting should be first and foremost aligned with the security design of the dWallet Network. they should also provide long-term economic stability and ample incentives to all participants, while being competitive enough for users. It should mostly be automated, and not based on significant human intervention. Known and tested models that have previously been used in other blockchain systems will have a big influence, and the end result should be simple to explain and transparent.

These preferences will shape the mechanism for allocating tokens from new minting and transaction fees paid by Users. A detailed deep-dive into tokenomics is planned to be published closer to mainnet launch, detailing the token mechanisms and considerations behind them in more details.

Initial allocation of dWallet Network Tokens

Ten billion tokens have been minted. The circulating supply of tokens will increase over time with the minting of new tokens by the protocol, pursuant to a schedule that will be determined by the community at a later point. Furthermore, mechanism related to staking such as inflation and/or validator stake subsidies are expected as part of the final token design (and tokens minted and/or received that way also not being subject to restrictions on distribution, and falling within the same allocation "bucket" e.g. community sales). The circulating supply may therefore not remain fixed over time. As the dWallet Network evolves, the community will also take over the decisions around the dWallet Network tokens, and initial plans are subject to changes. Having said all that, this is the planned allocation for the initial dWallet Network tokens that were minted:

Insiders - 45%

23.5% (2,350,000,000) — Early Contributors — tokens sold to prominent VCs, angel investors and other strategic partners prior to mainnet launch. All early contributor allocation is subject to a linear 3-year lock-up period, with daily unlocks, starting around mainnet launch, and any tokens in the early contributors allocation that has not been sold by mainnet launch, shall automatically be transferred to the Community Sales allocation (see below).

21.5% (2,150,000,000) — Core Contributors:

• 16.5% — Founders — all founder allocations are subject to a 10-year linearly declining lock-up schedule (more details below).
• 5% — Team — Tokens granted to team members are subject to a standard linear 4-year lock-up period, with a one-year cliff.

Community - 55%

30% (3,000,000,000) — Community Sales — The dWallet Network is built around its community, so community sales are the best way to place as many tokens in the hands of community members. An outline for community sales with more details is planned to be published closer to mainnet launch.

12.5% (1,250,000,000) — Community incentive and grant programs — community inventive and grant programs shall be created to foster the dWallet Network ecosystem. They may include incentivized testnets, development grants, research grants, partnership grants, public goods grants, bug bounties, airdrops, community engagement programs, and any other short-term or long-term program offered to the community to encourage outcomes that are beneficial to the dWallet Network and the ecosystem. Unless there is need for it to be otherwise, community incentive and grant programs shall be open for submission with a pre-defined selection process and transparent criteria.

2.5% (250,000,000) — Advisory Programs — allocation for meaningful ecosystem and community participants that can promote and advance the dWallet Network and its ecosystem.

10% (1,000,000,000) — Unallocated — 10% of the initial supply shall be allocated to one of the community "buckets" at a later point in time.

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Incentive Alignment

We understand that building the future of Web3 and digital assets, and solving the Silo Problem with noncollusive and massively decentralized dWallets, will require a massive amount of resources and investment, and will also most likely take the better part of a decade. In order to make sure we have all the resources required to support the continuing development of the dWallet Network and its ecosystem, we are committed to invest all the proceeds from the dWallet Network token and community sales in continuing the research, development and community building that is powering, advancing and benefitting the dWallet Network and its broader ecosystem.

More personally, as founders, we believe that token distribution, lockups and vesting schedules in crypto are broken as they exist today. Without standardized proper long term incentive structures, cases of abuse, opportunism and fraud are inevitable, making it hard for legitimate projects to build trust in the long term commitment of the team and founders. A radical change is required as part of the maturity of the crypto space, especially considering the instant liquidity of tokens and the fact that crypto projects are long-lasting initiatives - Crypto projects should adopt longer lockup periods than traditional startups, not shorter ones.

We propose a model of a 10-year linearly declining lockup:

Our view is that the 10-Year Model should be adopted by crypto foudners as the new standard, replacing the 2-year, 3-year and 4-year models that are prevalent today - and that is what we are personally doing as founders, and the projection of the token release schedule on all categories also considers the 10 year mark as the long term goal to be aligned to:

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We know that for many investors, teams and contributors, who are not as aligned as founders are with the dWallet Network community, the 10-year model may be difficult to adopt for various reasons, and unlike founders it might be hard for them to commit for such a long term. That is why for others beside the founders a 4-year or 3-year schedule is reasonable. However, we strongly encourage investors, team members and other contributors to show their support and commitment to the projects’ long-term vision by adopting the proposed 10-year model for themselves as well, which is the best way to publicly demonstrate that their incentives are aligned with those of the dWallet Network community and ecosystem.

Closing remarks

Creating an open network is about venturing into the uncharted. Pioneers who gave us the Internet, Bitcoin, and Ethereum ventured into this space with the hope that their creations could make a significant impact, even if the specifics of that impact were unclear. With humility, we aspire for the dWallet Network to offer a secure and decentralized foundation for access controlin Web3, contributing positively to both a decentralized internet and a decentralized world. The future ways this infrastructure will be used remain unknown. However, we are optimistic that the dWallet Network equips a creative community with exceptional technology, encouraging them to explore its potential in countless, possibly unprecedented ways.

Disclaimer: THIS IS NOT AN OFFERING OR THE SOLICITATION OF AN OFFER TO PURCHASE TOKENS. THIS DOCUMENT CONTAINS HYPOTHETICAL, FORWARD-LOOKING AND/OR PROJECTED FIGURES WHICH ARE NOT GUARANTEED; ACTUAL NUMBERS MAY VARY. DWALLET LABS MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE COMPLETENESS OR ACCURACY OF THIS PRESENTATION AND IT IS SUBJECT TO CHANGE WITHOUT NOTICE. THE DWALLET NETWORK TOKENS DO NOT REPRESENT EQUITY IN DWALLET LABS NOR DO THEY PROVIDE ANY PARTICIPATION RIGHT IN DWALLET LABS OR GRANT ANY RIGHT OF CLAIM FROM DWALLET LABS.