Trump-Backed WLFI Moves To Unlock 62bn Tokens, Opening Path to Liquidity

The proposal, published on 15 Apr, would apply to roughly 62.3bn locked tokens and includes a potential burn of up to 10% of allocations held by founders, team members and partners. If fully implemented, that would remove about 4.5bn WLFI tokens from circulation, permanently reducing total supply. 

World Liberty Financial is a decentralized finance (DeFi) project whose governance token, WLFI, is used for governance voting. The proposal follows reports of a looping strategy involving the use of WLFI as collateral to borrow and redeploy stablecoins within its own ecosystem. 

Vesting schedules introduced 

The proposal establishes a pathway for holders to access liquidity over time. Under the plan, early supporters would face a two-year cliff, meaning tokens cannot be accessed or sold during that period, followed by a two-year linear vesting phase in which tokens are gradually released. This results in a total four-year timeline before full distribution. 

Tokens held by founders, team members, advisors and partners would be subject to a longer schedule, with a two-year lock-up followed by a three-year linear release, extending full distribution to five years if they opt in. 

Up to 10% of insider allocations would be permanently burned upon approval of the proposal, reducing overall supply.  

The proposal will be put to a vote over a seven-day governance period, with a simple majority required for approval. It was immediately not known what percentage of WLFI tokens is held by insiders.

Leveraged liquidity 

The proposal follows a period of elevated activity on the DeFi lending protocol Dolomite, where World Liberty Financial used its own token as collateral to borrow stablecoins.  

Onchain data show that between February and early April, the project deposited nearly 5bn WLFI tokens as collateral and borrowed about $261mn in stablecoins across multiple transactions. Some of the borrowed funds were supplied back into the protocol as part of repeated borrowing cycles. 

The activity allowed the project to access liquidity without selling WLFI on the open market, while most of the token supply remain locked. Today's proposed vesting framework would instead create a defined route for tokens to enter circulation. 

WLFI-backed positions accounted for about 78% of Dolomite's total supplied liquidity of roughly $801mn, resulting in a high concentration of exposure to a single asset within the platform. 

The news of the collateralized borrowing pushed the token to a record low of $0.08 on 10 Apr, where it has largely remained. It was recently trading at $0.08 at 15:19UTC, down 1.6% over the past 24 hours.