The economics of Walrus are designed to enforce long-term storage contracts in a decentralized environment where traditional legal systems cannot reach. To mitigate the "tragedy of the commons" and ensure nodes do not default on their commitments, Walrus utilizes a robust incentive structure centered on the WAL token, competitive pricing mechanisms, and structured staking.
1. Staking and the $WAL Token
The primary tool for securing the network is staked capital. Staking underpins the system by rewarding honest behavior and punishing malicious or negligent actions through slashing.
• Delegated Staking: Users who do not run nodes can delegate their WAL tokens to storage nodes based on their reputation, own capital, and commission rates.
• Shard Assignment: Shards (and the subsequent rewards) are assigned to nodes in proportion to their total associated stake.
• Self-Custody and Slashing: Walrus implements staking via self-custodied objects on the Sui blockchain. Because Walrus does not hold the principal, penalties are assessed when a user "unwraps" their object to reclaim tokens. To ensure users return even heavily slashed objects, Walrus always returns a baseline amount (e.g., 5%) of the initial principal.
• Rewards and Penalties: At the end of each epoch, nodes earn rewards for proven data storage, facilitating writes, and participating in shard recovery. Conversely, they are penalized for failing storage challenges.
2. Shard Migration Incentives
As stake fluctuates, shards must migrate between nodes. The system uses financial pressure to ensure these migrations are completed efficiently:
• Cooperative Pathway: If nodes coordinate a transfer successfully, no penalties occur.
• Recovery Pathway: If a transfer fails, the sender is heavily slashed, and the receiver is lightly slashed (to prevent them from falsely reporting a failed migration). The slashed funds are then distributed to other nodes that assist in the shard recovery.
3. Market Dynamics and Pricing
@Walrus 🦭/acc creates a competitive market for storage and writes through a decentralized voting process:
• Collective Pricing: Nodes vote on shard sizes and prices for storage and writes. The system selects the 66.67th percentile (by stake weight) of submissions, ensuring that 2/3 of the network is willing to provide service at or below that price.
• Storage Resources: Storage is sold as "resources" (reservations) that can be traded, split, or reassociated with new blobs. This flexibility fosters a secondary market for storage, increasing economic efficiency.
• Refundable Write Deposits: To minimize network overhead, users pay a write price that includes a refundable deposit. The more storage node signatures a user collects (proving they sent the data directly to multiple nodes), the more of the deposit is returned, incentivizing users to reduce the need for node-to-node recovery.
4. The "Incentivized Read" Problem
Currently, Walrus encourages storage nodes to provide free read access, but this faces a "public goods problem" where nodes may avoid serving data to save bandwidth, hoping others will do it instead. To solve this, the sources propose several future mechanisms:
• On-Chain Bounties: Users could post bounties to access data if best-effort reads fail.
• Node Service Models: Nodes could strike paid bilateral contracts or enterprise deals to provide guaranteed high-quality read access.
• Light-Node Sampling: A second class of "light nodes" could be incentivized to store and serve small samples of data, earning rewards for helping in recovery or serving missing symbols.
5. Token Governance
Governance is strictly parameter-focused rather than protocol-focused. WAL token holders vote to adjust penalty levels (such as the cost for shard recovery or failing data challenges). Any node can issue a proposal, and consensus is reached if a proposal earns over 50% of the votes cast, provided a quorum is met.
