World Liberty Financial (WLFI), the Trump family-associated DeFi project, has announced a governance proposal to use all protocol fees for token buybacks and burns. The move comes as WLFI prices fell 30% from launch highs, sparking concerns among investors.
What Does the WLFI Token Burn Proposal Include?
The proposal suggests that 100% of protocol fees from liquidity positions on Ethereum, BNB Chain, and Solana be used to:
- Buy WLFI tokens from the open market
- Send them to a burn address, permanently removing them from circulation
According to the governance statement, this strategy aims to:
- Reduce WLFI’s circulating supply
- Increase the ownership share for long-term holders
- Create a direct link between protocol activity and token scarcity
A WLFI ambassador stated:
“The proposal favors going all-in on burning, instead of splitting between treasury operations and burn.”
Alternative options, such as a 50/50 split between treasury and burn, were considered but rejected.
Why Is WLFI Price Dropping?
WLFI launched earlier this week, but its price plunged from $0.331 to $0.210, a 36% decline, before stabilizing near $0.229 at the time of writing. Analysts attribute this drop to:
- Massive token unlocks—24.6 billion tokens were added to circulation, boosting supply
- Short sellers dumping WLFI after the initial hype
- Profit-taking by early buyers during the first trading sessions
Despite the fall, WLFI still maintains a market cap of $6.6 billion, with 27.3 billion tokens in circulation out of a 100 billion total supply.
The recent unlock increased the Trump family’s WLFI holdings to $5 billion, strengthening their control over the project. Initially, the team had promised founder holdings would remain locked, but this change has raised concerns among community members about fair distribution and long-term stability.
Community Response and Concerns
While most respondents support the burn proposal, some raised questions about:
- Fee volume uncertainty—making it hard to estimate burn impact
- Lack of contingency planning—what happens if the treasury needs funds after committing all fees to burning?
If approved, the burn mechanism could expand to include additional revenue streams, creating a long-term deflationary model for WLFI.
The WLFI token burn strategy could provide much-needed price support, but it comes with risks of reduced treasury liquidity. Investors are watching closely as governance voting unfolds—success could make WLFI one of the most aggressively deflationary tokens in the DeFi space.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.