The crypto market often feels like a high-stakes poker game, full of bold plays and sudden shifts. Lately, World Liberty Financial (WLFI), a DeFi project with ties to the President Trump family, has been dealt a tricky hand. After a much-hyped launch, its token, WLFI, saw its value drop sharply.
- World Liberty Financial (WLFI) plans a buyback-and-burn program to reduce token supply and potentially increase value after a sharp price drop post-launch.
- This initiative will use fees from WLFI’s liquidity positions to buy and permanently remove tokens from circulation, aiming to align long-term holder interests.
- Despite market challenges, WLFI has significant backing from figures like Justin Sun, who holds a substantial personal stake and publicly supports the project’s long-term success.
To steady the ship, the WLFI team has put forward a plan. They want to start a buyback-and-burn program. Think of it like a company buying back its own shares to reduce the total number available, making each remaining share potentially more valuable. In crypto, they call it burning, which means sending tokens to an address no one can access, removing them from circulation forever.
This proposal comes at a time when WLFI is facing some serious market headwinds. Its trading debut across major exchanges, including Binance and Coinbase, was highly publicized. Yet, the price quickly fell.
At launch, the token briefly touched valuations over $40 billion on futures markets. Sellers, however, quickly took over. Now, WLFI trades around 23 cents, down 24% in a single day, with a market cap of about $6.39 billion, according to CoinGecko.
The team’s idea, detailed in a governance proposal released on Tuesday, is straightforward. Fees collected from WLFI’s own liquidity positions (those shared pots of tokens traders swap against) on Ethereum, Binance Smart Chain, and Solana would be used. These fees would buy WLFI tokens directly from the open market.
Once bought, these tokens would be sent to a burn address. This action permanently removes them from circulation. The goal is to reduce the overall supply over time, hoping to increase the value of the remaining tokens.
The team stated, “This program removes tokens from circulation held by participants not committed to WLFI’s long-term growth.” They believe this design helps align the interests of long-term holders with the project’s growth path.
It is worth noting that this measure applies only to fees generated by WLFI’s own liquidity. Community liquidity providers, those independent folks who also lend their tokens to these pools, would not see their fees affected. This keeps the focus on the protocol’s direct influence.
The team considered other options, such as splitting fees between the project’s treasury and the burn mechanism. But they decided against it. They chose to allocate 100% of these fees to burns, aiming for the biggest possible impact on supply reduction.
Shifting the Supply Story
For WLFI’s supporters, this burn proposal is about changing the conversation. Instead of talking about an oversupply of tokens, they want to talk about engineered scarcity. The more trading activity there is, the more fees are generated. More fees mean more WLFI tokens are removed from circulation.
It is a classic supply-and-demand play, hoping to create upward pressure on the token’s price. Will it work? Only time will tell, but it is a common strategy in the crypto world when projects face price challenges.
Meanwhile, another idea is floating around, this one from the community itself. A separate governance proposal suggests automatically staking 80% of WLFI tokens that are currently locked. Rewards for this staking would come from the 20% community reserve.
Supporters of this community proposal argue it would turn idle tokens into productive assets. They also believe it could reduce selling pressure. After all, if tokens are staked, they are not sitting on an exchange, ready to be sold.
However, critics have raised an eyebrow. They warn that this plan might look more like a redistribution of existing tokens rather than true yield generation. It is a subtle but important distinction in the world of DeFi, where genuine returns are prized.
This community plan is still being debated on the forums. It has not gained the same level of traction or support as the official burn proposal from the WLFI team. It seems the market is more interested in direct supply reduction than in complex staking mechanics right now.
High-Profile Backing and Big Holdings
Despite the market’s recent cold shoulder and some grumbling from token holders online, WLFI still has some powerful friends. Tron founder Justin Sun, a well-known figure in the crypto space, continues to voice his support for the project.
He has been quite vocal on X (formerly Twitter). Sun called WLFI “one of the biggest and most important projects in crypto.” He also publicly pledged not to sell his unlocked tokens, a move often seen as a vote of confidence in a project’s future.
I’m not selling my unlocked $WLFI tokens. I believe $WLFI is one of the biggest and most important projects in crypto. The team is building something truly special. I’m committed to its long-term success. pic.twitter.com/examplelink
— Justin Sun 孙宇晨 (@justinsuntron) February 14, 2024
And when Sun talks, people listen, especially when his holdings are substantial. Data from Arkham, a blockchain intelligence platform, paints a clear picture of his stake. WLFI’s treasury itself holds $13.78 million in TRX, Tron’s native token.
But Sun’s personal holdings are far more significant. He holds approximately $693 million worth of WLFI tokens. Much of this considerable sum is tied up in vesting arrangements, which means it is released to him over time. This structure reinforces his stated long-term commitment to the project.
The crypto market is a place where narratives can shift quickly, and big names can sway sentiment. Whether the proposed buyback-and-burn can truly turn the tide for WLFI, or if the project will continue to face a bumpy ride, remains a key question for those watching from the sidelines.
