Walrus Launches WAL Staking Rewards to Boost Platform Viability
2min read Walrus, a decentralized storage platform, is on the verge of launching its wal Staking Rewards feature. This new addition is aimed at encouraging users to stake their WAL tokens, the native cryptocurrency of the walrus protocol. The staking mechanism is part of a broader strategy to bolster the platform's economic model and ensure its long-term viability.
The WAL Staking Rewards feature is underpinned by a unique pricing and business model that sets it apart from traditional smart contract platforms. Unlike other platforms that prioritize transaction execution, Walrus focuses on data storage on the blockchain. This approach involves significant fixed costs for high-throughput blockchain validators and variable costs for storage infrastructure. For instance, increasing the amount of data stored from 1 PB to 2 PB necessitates a substantial increase in storage capacity, as data must be sharded and distributed across multiple machines to ensure security and elasticity.
Walrus's pricing model is structured around the fact that the system stores approximately five times the amount of raw data that users intend to store, which is at the forefront of replication efficiency for decentralized platforms. This storage is fundamentally a cross-time service, where users can pre-pay for extended storage periods, but the fees must be delivered over time to ensure data security. This contrasts with smart contract platforms, where transaction execution is immediate and one-time.
In Walrus, fees are collected from the outset and are linearly related to the amount of data stored and the number of epochs for which it is stored. The funds are then allocated to different time periods, governed by four typical rules. Users pay a fee that is the storage price minus the subsidy rate. Node operators earn a commission based on the storage price plus the subsidy rate. After deducting the commission, stakers receive revenue based on the storage price plus the subsidy rate. The subsidy payment system's income is the difference between the storage price and the user payment, multiplied by two and the subsidy rate.
The token economics of Walrus include a 10% allocation specifically aimed at boosting network adoption and growth in the early stages. A portion of these WAL tokens will be distributed as subsidies, ensuring that Walrus users can utilize the protocol at a fraction of the market price while guaranteeing that storage operators earn enough to cover their fixed costs. As the protocol matures and the user base expands, storage operators will work in parallel to reduce the fixed cost per unit of stored data and improve operational efficiency. Technological advancements in storage hardware, such as future reductions in HDD and SSD device prices, along with competition among manufacturers, will further lower the cost of on-chain storage.
From a long-term perspective, this setup ensures that Walrus will be widely adopted and financially sustainable, even as subsidies are gradually phased out. The design of the staking rewards starts with a low ratio but becomes increasingly attractive as the network develops. While the initial low return rate may seem unappealing, it ensures high returns in the long run while maintaining operational sustainability. Participants in the Walrus network sacrifice some short-term gains for the network's long-term success.
The economic model of Walrus is designed to balance the interests of storage operators and stakers. Storage operators' costs are linearly related to the amount of data stored, while stakers focus on the data volume as it affects their staking rewards. As Walrus usage increases, storage operators earn proportionally more revenue to offset additional costs. Conversely, stakers see their staking rewards increase without a corresponding increase in costs, leading to significant rewards over time.
The scalability and capital efficiency of Walrus's incentive model create a feedback loop where increased product usage leads to lower user costs. As Walrus gains widespread adoption, market forces ensure that some efficiency gains are passed on to end-users, reducing the on-chain storage price. This dynamic benefits all Walrus users, storage operators, and WAL stakers, creating a fair economic system.
In summary, Walrus's pricing model is complex and designed to increase staking rewards over time while ensuring that operators have a viable business model and supporting the ecosystem's adoption. Although the initial staking rewards may be low, the long-term benefits are substantial, as Walrus can support higher reward rates and pass on cost reductions to end-users, further fueling its growth.
