The Ongoing Trump Effect
Author: Huo Huo | Plain Language Blockchain
Trump's victory in the U.S. presidential election propelled Bitcoin to break the $100,000 mark, accelerating the current bull market. Not only Bitcoin, but projects related to the Trump team are also taking off.
Recently, World Liberty Financial (hereinafter referred to as WLFI), closely related to the Trump family, has frequently purchased ETH, LINK, AAVE, ENA, and others, sparking a market frenzy and becoming a significant barometer in the crypto investment market.
So, what is WLFI, and what market-moving actions might it take in the future?
01
What is WLFI?
WLFI is a DeFi project supported by Trump and his family (including his eldest son Donald Trump Jr., third son Eric Trump, and youngest son Barron Trump), officially launched on the Aave V3 platform on the Ethereum mainnet in September 2023.
WLFI is essentially a DeFi platform that allows users to borrow, lend, and invest in cryptocurrencies. The founder's vision is to create a tool for achieving financial independence, enabling users to conduct private peer-to-peer transactions without relying on traditional financial intermediaries, thereby promoting the development of global decentralized finance, especially for those underserved by traditional banking services. The Trump family has referred to it as "the future of crypto DeFi."
WLFI is the governance token of World Liberty Financial, and each token grants its holder one vote in community proposals on the governance platform. However, its initial distribution plan has undergone adjustments, shifting from over half being allocated for sale to community and creator rewards, reflecting changes in community incentives and the share of initial supporters.
Unlike other governance tokens such as UNI and MKR, WLFI does not provide economic rights, meaning it cannot be transferred after redemption. This implies that users cannot trade/exchange/sell WLFI after holding the token. Although changes may be made through governance proposals in the future, currently, the token cannot be traded for a long time.
Due to its non-transferability, which does not provide short-term profit opportunities for cryptocurrency investors, WLFI has had low liquidity since its launch on October 15.
It is also worth noting that WLFI is only available for users outside the United States and is not registered with any financial regulatory agency. This means that U.S. residents cannot participate in trading these tokens, likely to avoid scrutiny from U.S. law enforcement.
Considering its promotional methods, more straightforwardly, WLFI is a project under Trump's influence, seeking to promote the use of dollar stablecoins and DeFi applications, aiming to strengthen the dollar's position in the DeFi space.
Therefore, it is necessary to explore how the Trump family supports this project.
1) Team Member Situation
According to WLFI's official information, there is a statement describing itself: inspired by Trump, promoting the widespread adoption of stablecoins and DeFi, especially dollar stablecoins, to ensure the dollar's dominance.
Donald Trump himself serves as the "Chief Cryptocurrency Advocate" for the project, while his sons Eric Trump, Donald Trump Jr., and Barron Trump act as Web3 ambassadors, helping to promote the platform and attract mainstream users.
In this context, according to the white paper, DT Marks DEFI LLC (a company under Trump) agreed to promote WLFI and granted it the right to use the names and images of Trump family members for publicity. In return, WLFI pays tokens to DT Marks DEFI LLC and shares a portion of the net revenue from the agreement (approximately 75%).
However, the Trump family has legally distanced itself from any connection to WLFI. Although WLFI claims to be "the only DeFi platform inspired by Trump," the positions of advocates and ambassadors from the Trump family are not real management roles, and there is a small print at the bottom of the official website:
Donald J. Trump, any family member, or any director, officer, or employee of the Trump Organization, DT Marks DEFI LLC, or their respective affiliates, are not managers, directors, founders, or employees of WLFI or its affiliates. … World Liberty Financial and its WLFI Token are not political in nature and are not part of any political campaign.
Therefore, some critics argue that WLFI is deeply tied to the Trump family, a product branded by the Trump family, with unknown operators leveraging the Trump family's reputation to launch products, while the Trump family profits from the branding. This type of business operation is common for the Trump family. For example, many hotels or buildings named Trump around the world are collaborations with Trump under licensing and branding agreements.
Overall, although various promotions claim that WLFI has intricate connections with the Trump family, there is no legal connection. This may also be one reason why people are skeptical about WLFI.
In addition to the strong support from the Trump family, the WLFI team consists of experienced crypto practitioners.
The official website shows that WLFI has five founders, among whom Chase Herro and Zak Folkman's industry backgrounds are not particularly impressive. According to CoinDesk, they previously launched a lukewarm DeFi product called Dough Finance, which suffered a $2 million loss due to a hack in the summer of 2024. Additionally, WLFI's blockchain lead, Octavian Lojnita, and an anonymous developer also come from the former company Dough Finance. CoinDesk's report also indicated that early reviews showed that the codebase released on WLFI directly copied Dough Finance's code, which was later deleted.
However, WLFI claims that their code has been audited by several firms (such as BlockSec, Fuzzland, PeckShield, Zokyo, etc.) for security.
Besides Chase Herro and Zak Folkman, the other three co-founders of WLFI are from the Witkoff family (founder Steven Witkoff, Zach Witkoff, Alex Witkoff), with Steven Witkoff being a well-known real estate developer in the U.S. and a friend of Trump.
In addition, WLFI has an advisory team composed of venture capitalists, lawyers, and blockchain engineers. Among them are Sandy Peng, co-founder of the Ethereum Layer 2 blockchain Scroll, and Luke Pearson, a general partner at Polychain Capital.
It is evident that these advisors have specific technical expertise and market experience, which will help WLFI achieve its long-term goals, especially in promoting dollar stablecoins and expanding DeFi applications.
2) Recent Developments
Although the entire altcoin market has begun to recover under Bitcoin's influence, WLFI's sales remain less than optimistic, with only about a quarter sold since its launch.
However, two noteworthy events occurred: first, at the end of November, Tron founder Justin Sun invested $30 million in WLFI Token to show support for the project, becoming the largest public investor in the project. Subsequently, on November 26, Justin Sun was appointed as an advisor to WLFI.
Following the announcement of Justin Sun as an ambassador advisor, on December 18, WLFI announced a partnership with Ethena Labs, with both parties seeking long-term collaboration, starting with Ethena's revenue token sUSDe.
In addition, the most attention-grabbing aspect is the various altcoins exchanged by WLFI, as each move can directly trigger a wave of trading enthusiasm.
02
On-chain Activities of the WLFI Project
According to monitoring by Spot On Chain, since November 2024, WLFI has reserved various mainstream and emerging crypto assets through a main wallet address, especially in December, with total expenditures nearing $45 million, including ETH, cbBTC, LINK, AAVE, ENA, and the latest ONDO, with total holdings exceeding $84.8 million.
Source: https://intel.arkm.com/explorer/entity/worldlibertyfi
According to incomplete statistics, its reserved crypto assets include:
1) ETH
As the second-largest cryptocurrency platform globally, Ethereum's position and influence in the industry are well-known.
WLFI has repeatedly acquired ETH, with the highest expenditure on ETH. Previous reports indicated that it spent $30 million to reserve 8,105 ETH at an average price of about $3,700, while the most recent operation was on December 20, where it acquired 722.213 ETH for $2.5 million through Cow Protocol, bringing WLFI's total ETH holdings to 16,400 ETH.
2) cbBTC
cbBTC (Coinbase Wrapped Bitcoin) is an ERC-20 token launched by Coinbase, designed to bring the value of Bitcoin (BTC) to blockchain networks like Ethereum. WLFI spent $10 million to exchange for approximately 103 cbBTC, with an average transaction price of $97,181 per token; subsequently, WLFI converted all cbBTC into WBTC.
This move occurred on the same day Coinbase announced the delisting of WBTC due to its failure to meet CEX standards. WLFI's action is seen as support for WBTC following its delisting by Coinbase.
WLFI's choice to convert cbBTC to WBTC may be due to WBTC's maturity and infrastructure advantages in the market, or it could be influenced by Justin Sun's role as an advisor.
This is because Justin Sun's custodial company, BiT Global, announced a partnership with BitGo, the company behind WBTC, in August of this year. In this partnership, the WBTC business was transferred from the original company to BiT Global and Justin Sun.
3) AAVE
AAVE is a decentralized lending protocol based on Ethereum that allows users to deposit to earn interest or borrow crypto assets, which is how WLFI leverages the launched protocol.
WLFI has also been active in investing in AAVE tokens, having made multiple allocations. WLFI exchanged for AAVE at a price of $246,000 for tokens priced at $360 each; it also exchanged $1.25 million for AAVE priced at $308.4 each; additionally, it exchanged $1 million for AAVE priced at $297.8 each. Currently, WLFI holds a total of 6.137 million AAVE.
4) LINK
The project behind LINK is Chainlink, a decentralized oracle network aimed at providing reliable off-chain data for smart contracts on the blockchain. In simple terms, Chainlink helps blockchains access and use external data.
WLFI has also frequently invested in LINK, having allocated funds at prices of $34.2, $25.5, and $27, totaling approximately $8 million spent. Currently, WLFI holds a total of 78,300 LINK.
Reports indicate that WLFI will integrate with Chainlink oracles to accelerate the adoption of DeFi. As Chainlink is currently the leading data oracle solution in the market, WLFI, as a DeFi platform, may need to utilize Chainlink's oracle services to ensure the accuracy and security of its financial products. Therefore, purchasing LINK may be aimed at acquiring and using Chainlink's services to enhance the platform's functionality and credibility.
5) ENA
Ethena (ENA) is a decentralized finance platform that ensures asset stability through an algorithmic stablecoin mechanism. ENA can be used for collateral, trading, and governance. The platform offers efficient trading, liquidity mining, and DeFi integration, aiming to provide stable and transparent financial services for crypto assets.
WLFI has spent a total of $750,000 to reserve 741,687 ENA, with an average transaction price of $1.011 per token; additionally, it reserved 509,954 ENA at a price of $500, averaging $0.98 USDT per token, currently holding a total of 741,000 ENA.
However, a spokesperson for WLFI stated that the purchase of ENA tokens is not directly related to the partnership with Ethena Labs, merely indicating WLFI's confidence in the long-term viability and success of the Ethena network.
6) ONDO
The project behind Ondo is Ondo Finance, a DeFi protocol based on Ethereum that aims to transform traditional liquidity services into tokenized real-world assets, connecting crypto assets with the real economy. Its flagship products include bonds RWA. Currently, Ondo has launched four products on Binance contracts, including the U.S. money market fund OMMF, Blackrock's short-term U.S. Treasury ETF OUSG, tokenized notes USDY, and Flux Finance, which supports tokenized securities collateral.
For Ondo, WLFI has only made one allocation, spending a total of $250,000 to acquire 134,000 ONDO, with an average transaction price of $1.86 per token.
03
What Other Information Has Been Revealed?
It can be seen that WLFI has made many on-chain operations recently, with its allocated tokens including stablecoins (USDT), collateralized lending, RWA, oracles, and wrapped Bitcoin projects, essentially covering all categories of on-chain DeFi. Besides the obvious DeFi asset reserves, we can also observe the following points from the project's on-chain activities:
1) Adoption of Safe Multisig Wallets
Safe multisig wallets are asset management tools based on smart contracts that enhance the security of digital assets through a multisig mechanism (requiring multiple accounts to co-sign). They support flexible signing rules; in a Safe multisig wallet, it can be set to single-sign (e.g., 1/1), allowing one person to authorize transactions, or configured to multisig (e.g., 2/3 or 3/5), requiring a preset number of signers to complete operations. It is also compatible with various blockchains and token types, widely used for team fund management, DAO financial operations, personal asset protection, and custodial services, favored by Web3 users for its high security and transparency.
WLFI's on-chain operations involve a Safe multisig wallet with a total of seven signers, one of which is an active DeFi user.
2) Token Exchanges via Built-in Cowswap in Safe Wallet
On-chain data shows that WLFI has conducted over 150 transactions through the decentralized trading platform CowSwap in less than two months. CoW Swap is the frontend of CoW Protocol, serving as a DEX aggregation protocol that integrates batch trading (Batch Auctions), trade intents, and MEV protection, deployed on Ethereum and Gnosis, and is currently one of the popular DEXs.
Due to the large number of exchanges WLFI conducted through its wallet, the native token COW of CoW Protocol saw its price surge over 30% within 24 hours, and over 80% in 7 days.
3) Considerations Behind Token Selection
Diversified Portfolio: By allocating tokens from different sectors, WLFI can not only reduce the volatility risk of a single asset but also capture more market growth opportunities while leveraging market enthusiasm to enhance capital operation effects.
Enhancing DeFi Ecosystem Influence: Most of these tokens belong to core DeFi assets, and allocating these tokens helps WLFI expand its layout and influence in the DeFi ecosystem.
Strategic Cooperation Opportunities: Certain allocated specific assets (such as ENA and ONDO) may be based on considerations of cooperation with these projects, thereby enhancing its brand value and market voice.
Overall, this aligns well with WLFI's development goals, which aim to continuously enhance influence through various means to build a comprehensive on-chain lending and trading platform.
04
Conclusion
If BTC's price previously rose from $70,000 to over $100,000 due to the "Trump Effect," then the tokens held by WLFI have also been driven by this effect. For example, on December 14, after WLFI allocated LINK and AAVE, the unrealized profit on LINK holdings was $299,000, and on AAVE holdings, it was $338,000. On December 16, as news of WLFI's operations spread, the price of ONDO broke through $2.1 USDT, setting a new historical high with a 24-hour increase of 16.33%.
As a result, there are rumors that WLFI's assets may become a barometer for established DeFi, and speculation is rife about which crypto assets WLFI will reserve next.
Some believe that the team supported by investment advisors is worth paying attention to, while others think that leading projects in various sectors, such as those with high asset value and brand value, may become new targets. There are also those who believe that high-quality DeFi assets within the top 100 market cap should not be overlooked.
However, we will wait and see what actions WLFI will take next.
Article link: https://www.hellobtc.com/kp/du/12/5601.html
Source: https://mp.weixin.qq.com/s/tdAlbN-21yaCz0a22Z1ZMQ
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