What is WalletConnect, and how does it work

What is WalletConnect

In the rapidly evolving world of cryptocurrencies and decentralised applications (dApps), securely connecting a personal wallet has become a fundamental step. However, this process can present risks, such as the unnecessary sharing of personal data or interactions with malicious smart contracts.

WalletConnect is an open-source protocol designed to solve this issue. It establishes a direct, encrypted connection between a crypto wallet and a dApp, ensuring maximum security, privacy, and ease of use.

The protocol has two main objectives:

Unlike traditional connection methods, WalletConnect places the user at the centre of the process. By using this protocol, users maintain full control over their digital identity. Each interaction remains private and anonymous, while still ensuring broad compatibility across blockchain ecosystems.

WalletConnect is currently supported by:

Since its release, WalletConnect has become a reference standard in Web3 infrastructure. Some key figures include:

These numbers confirm WalletConnect’s role as one of the pillars of the decentralised ecosystem.

In the following sections, we will analyse how WalletConnect works step by step, focusing on the role of QR codes, session keys, and encrypted channels that allow secure communication between wallets and dApps.

How WalletConnect works

WalletConnect is becoming one of the most widely adopted tools in the Web3 ecosystem, valued for its simplicity, privacy, and security. It acts as a bridge between a user’s personal wallet and a decentralised application (dApp), ensuring that the two never interact directly.

The process is straightforward:

This mechanism guarantees that your wallet can interact with the dApp without exposing sensitive data, creating new accounts, or entering login credentials. Users retain full control over which permissions are granted, preserving both privacy and security.

Another strength of WalletConnect is its broad compatibility. The protocol is supported by over 600 wallets, including widely used options such as:

This extensive integration makes WalletConnect a universal standard for connecting wallets and dApps across multiple blockchains.

Open Source by choice and necessity

WalletConnect was designed as an open-source protocol, not only as an ideological stance but also out of necessity. To establish trust in an infrastructure that enables direct connections between personal wallets and decentralised applications, transparency was essential.

In the DeFi and Web3 ecosystem, where security, transparency, and user control over data are paramount, open-source code ensures that anyone—developers, users, and independent auditors—can inspect and verify the protocol. This drastically reduces the risks of vulnerabilities, malicious behaviour, or data misuse.

Beyond security, the open-source model fosters continuous innovation. A global community of developers can contribute improvements, refine performance, and expand compatibility across blockchains and applications. This collaborative development process ensures WalletConnect evolves in step with the rapidly changing Web3 environment.

The combination of usability, strong privacy safeguards, and open-source governance has positioned WalletConnect as one of the most reliable and widely adopted standards in the decentralised world.

Technological analysis

So how does WalletConnect function from a purely technical perspective? To provide its secure connection layer between wallets and dApps, WalletConnect relies on a hybrid architecture that blends certain Web2 mechanisms with the foundational principles of Web3—while operating independently from any blockchain.

Unlike protocols that require a consensus network, WalletConnect uses an off-chain infrastructure designed to guarantee low latency, high scalability, and secure communications. This approach allows it to deliver fast and reliable interactions without compromising privacy or decentralisation.

At the core of WalletConnect’s infrastructure lies the Relay Service, which transmits messages between wallets and decentralised applications. Every message is protected through end-to-end encryption (E2E), ensuring that only the wallet and the dApp involved in the interaction can decrypt and read its contents.

This design provides a high level of confidentiality and integrity, making WalletConnect particularly well-suited for future applications such as private payments, where preventing third-party access to transaction data is essential.

The WalletConnect network relies on Service Nodes, which form the backbone of the infrastructure for storing and relaying encrypted messages. These nodes use the technique of rendezvous hashing, enabling efficient and decentralised data distribution without a single point of control. The result is improved resilience, fault tolerance, and effective load balancing.

To guarantee message persistence even when users are offline, WalletConnect implements a mailbox-like system. This ensures that once clients reconnect, they can retrieve their pending messages without loss of data.

From an engineering perspective, the nodes are primarily developed in Rust and use RocksDB to optimise read and write operations for high throughput and low latency.

At present, the network runs in a permissioned environment, with Service Nodes operated by authorised partners. However, WalletConnect’s long-term vision is a permissionless model, where anyone can operate a node or gateway, provided they meet performance and integrity requirements.

Reliability is a critical factor for the system. Each Service Node undergoes continuous evaluation based on two metrics:

A weighted formula is used to assign performance scores:

where Wu and Wl are adjustable weight variables.This scoring system ensures that only the most reliable and efficient nodes contribute meaningfully, while dynamically adapting to evolving network requirements.

To achieve multi-chain interoperability, WalletConnect adopts the standards defined by CAIP (Chain Agnostic Improvement Proposals). These specifications define common message formats that allow wallets and dApps to communicate seamlessly, even if they operate on different blockchains such as Ethereum, Solana, Cosmos, Polkadot, or Bitcoin.

By following CAIP standards, WalletConnect ensures composability and fosters the development of a truly multi-chain Web3 ecosystem.

WalletConnect is inherently non-custodial: it never stores or manages users’ private keys. Instead, all cryptographic material remains entirely under the user’s control.

Privacy is also a core principle. The protocol does not collect personal data, wallet addresses, KYC information, or transaction hashes. Even the Relay Service is “blind” to the content of the messages it transmits, reinforcing its role as a neutral and privacy-preserving intermediary.

This architecture ensures that WalletConnect interactions remain secure, anonymous, and fully aligned with Web3’s ethos of decentralisation.

Wallet Connect Token (WTC)

Having clarified what WalletConnect is and how it works, it is now essential to examine the economic and financial dimensions of the project.

Like many Web3 initiatives, WalletConnect introduces its own native token—WCT (WalletConnect Token)—created to support the long-term development, security, and governance of the network.

WCT plays a central role within the ecosystem: it is the mechanism that enables decentralised governance, incentivisation, and community participation, while also driving the transition towards a fully permissionless, community-managed infrastructure.

Key functions of the WCT token

The WCT token represents the economic and operational backbone of the WalletConnect Network. Its design ensures not only participation and incentivisation but also the sustainability and decentralised governance of the protocol.

The token serves four primary functions:

The tokenomics of WCT are designed with a fixed supply of 1 billion tokens, aligning long-term growth with the principle of decentralisation. The allocation strategy reflects both the project’s immediate needs and its long-term vision:

The initial tokenomics model of WalletConnect does not include inflation. In other words, there is no pre-programmed increase in the total supply of WCT tokens. For the first three to four years, the network will rely on existing allocations to sustain operations, incentivise participation, and maintain stability.

That said, flexibility is built into the governance model. Should the need arise in the future, the community and token holders could vote to introduce an inflationary mechanism. Such a decision would not be taken lightly—it would require a detailed evaluation of network performance, user demand, ecosystem sustainability, and long-term growth objectives.

Any potential move toward inflation would therefore be the result of a transparent governance process, ensuring alignment with the interests of the community and the health of the protocol.

Future challenges

As explained above, WalletConnect currently runs on a hybrid infrastructure that blends elements of Web2 and Web3. While this model ensures efficiency and scalability, its main limitation lies in its permissioned nature—node operation and management are still restricted to authorised participants. This stands in contrast to the core values of Web3, where decentralisation, openness, and permissionless access are fundamental principles.

According to the official roadmap, the development team intends to evolve WalletConnect into a fully decentralised and permissionless protocol, free from centralised control. Achieving this transformation is critical to aligning the project with the ideals of Web3.

The transition will not happen overnight. The roadmap envisions a gradual evolution, including:

This journey represents WalletConnect’s biggest challenge to date: balancing technological innovation, decentralised governance, and user privacy while still delivering a seamless, high-performance user experience. The ability to manage this transition successfully will determine WalletConnect’s role in the long-term future of Web3.