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News/Worldcoin Transitions Rewards to Native Tokens, Sparks Regulatory Concern

Worldcoin Transitions Rewards to Native Tokens, Sparks Regulatory Concern

Van Thanh Le

Oct 23 2023

9 months ago4 minutes read
Dynamic robot performing iris scan for Worldcoin Orb

A Deeper Dive into Worldcoin’s Reward System Reconfiguration 

A mammoth shift is afoot in the Worldcoin universe. The cryptocurrency project plans to reconfigure the rewards it pays to the operators of its identity-scanning hardware units—Orbs. Until now, Worldcoin has rewarded Orb operators with USDC stablecoins

But starting from October 10, 2023, the project has embarked on an epic transition phase, where the Orb operators are to be compensated in Worldcoin's native cryptocurrency—the WLD tokens. 

As per their announcement, this major change within their operations and reward systems will be systematically completed by November 2023. It's a leap not just for Worldcoin, but also the recipients of their sophisticated crypto transactions—Orb operators across various global jurisdictions. 


Understanding Worldcoin’s Tokenomics and Financial Metrics

To appreciate the impact of this transitional phase, let's explore Worldcoin’s financial dynamics—its tokenomics. Worldcoin’s financial metrics reveal a significant increase in the circulating supply of WLD tokens. From an initial release of 100 million WLD tokens at its inception, the number has surged to roughly 134 million tokens

worldcoin circulating supply.webp
Source: @worldcoin/ Dune

Out of these, a staggering 100 million WLD tokens were portioned out as loans to various market-makers, with a previously set expiration date of October 24, 2023. However, Worldcoin adjusted this expiry to a later date—December 15, 2023, shrinking down the loaned amount to 75 million WLDs. This opened up a pool of 25 million WLD tokens, which the market-maker entities can either return or purchase. 

The remaining cache of approximately 34 million WLD tokens, were methodically distributed to their Orb operators and novice users as “free user grants.” No doubt, an eminent part of Worldcoin's strategy to propagate their native tokens and promote usage. 


Understanding the Market Reaction and Price Metrics

Such a significant shift within Worldcoin's operations inevitably shaped market sentiment and led to an effect on its price metrics. In the immediate 24 hours following the announcement of the reward reconfiguration, the WLD token experienced a crypto price drop of about 5% to $1.53. Later on, it painted a rather distinct picture with a slightly lesser decline on cryptocurrency charts—4%. 

Taken together, these figures represent a mixed reaction from the market to Worldcoin’s pivot in its reward system. 

chart (8).webp

Navigating Regulatory and Privacy Concerns amid Transition

Against the backdrop of these changes, Worldcoin's brinkmanship in implementing its iris-scanning technology has triggered charged responses from global regulators. The identity verification technique, a cornerstone of Worldcoin's operations, has generated concerns in prominent global jurisdictions such as Kenya, Germany, France, and the UK. 

These governments expressed varying degrees of worry, with Kenya even suspending Worldcoin's activities. However, the crypto behemoth seems undeterred, reaffirming its commitment to user privacy through its zero-knowledge proof technology. 


A Brief Overview of Worldcoin’s Technology and Operations

Scales balancing USDC and WLD tokens to show Worldcoin's reward shift (1) (1).webp

Worldcoin's operations rely heavily on a hardware unit known as the Orb, employed to scan individuals’ irises for identity verification. These Orbs are globally operated by independent operators in over 35 countries.

The fascinating technology behind the Orb involves linking a unique QR code from Worldcoin's app to the individual's retina scan, ensuring that each unique person is tied to one exclusive World ID. 


Quoting Worldcoin

Giving an insight into their token supply approach, an official Worldcoin post explains, "The WLD token was launched with a relatively low circulating supply of just above 100M WLD.” 

The post goes on to outline their future token distribution plans: "To achieve this, the majority of the WLD token supply will be given to new and existing users in the form of user grants over the years to come."

brave_screenshot_worldcoin.org (1).webp
Source: Worldcoin Blog

Worldcoin's Future Goals and Objectives

Worldcoin's ambitious long-term vision is the creation of a universal basic income system by issuing their cryptocurrency to individuals who prove their 'humanness' with the Orb. A goal audacious in its scope but revolutionary if achieved, fundamentally altering the way crypto ecosystems operate.


Understanding the Geographical Limitations

Globe with flags representing Worldcoin's global Orb operators (1) (1).webp

It's important to note that Worldcoin tokens are off-limits to residents of the United States and other specified territories due to regulatory reasons. Arkane, Worldcoin’s custody provider, doesn't support interactions with U.S. IP addresses.


Key Takeaway: The Road Ahead for Worldcoin

The strategic shift from USDC to WLD tokens for rewarding Orb operators marks a transformative moment in Worldcoin's journey. Designed to boost the circulating supply of WLD tokens, the move triggered mixed market responses and amplified regulatory scrutiny. 

However, the company's determination to continuously innovate, their clear financial metrics, and their commitment to user privacy positions them as a significant player navigating the choppy waters of the crypto world. Regardless of the obstacles, the road ahead for Worldcoin appears both challenging and exciting.

With this transition, Worldcoin is not just redefining itself but also shaping the future contours of the volatile, ever-evolving cryptoverse.


FAQs

1. What does the shift from USDC to WLD mean for Worldcoin Orb operators?

Operators will now receive WLD tokens instead of USDC. This change started making rounds from October 2023 and is expected to become the standard across most jurisdictions by November 2023.

2. What happened to the 100 million WLD tokens disbursed as loans to market makers?

The 100 million WLD tokens were initially loaned to five market makers with an expiry set for October 24, 2023. Worldcoin extended this deadline to December 15, 2023, reducing the loaned amount to 75 million WLD. The remaining 25 million WLD tokens can either be purchased or returned.

3. How has Worldcoin’s announcement affected its token price?

The announcement saw mixed reactions. One source indicated a decrease of an over 5% in the WLD crypto coin prices to $1.53 within 24 hours, with a slight recovery of a 4% decline later.

4. What potential issues has the Orb raised among regulators?

Worldcoin’s Iris-scanning technology, vital for its identity verification process, has garnered varying levels of concern among regulators globally. Kenya has even suspended Worldcoin’s operations in response.

5. What are Worldcoin’s long-term goals with the Orb?

Worldcoin aims to distribute its cryptocurrency to Orb-verified individuals, with the ambitious goal of establishing a universal basic income system down the line.

This article has been refined and enhanced by ChatGPT.

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