World Liberty Financial's Troubling Debut

The debut of World Liberty Financial, a DeFi protocol that counts former President Donald Trump as its "chief crypto advocate," is not off to a great start.

The project's public token sale generated under $10 million on its first day. At the time of writing, a total of about 857 million WLFI tokens had been sold for $0.015 apiece, a fraction of the 20 billion tokens available to the public, generating sales of $12.8 million.

The Trump-connected founding team hoped the initial sale of WLFI tokens would raise $300 million and sell 20% of the token supply, according to the project's "gold paper" released this week. That matches what The Block reported on Oct. 10, noting that the project was looking at a $1.5 billion fully diluted valuation.

It's an underwhelming debut for a hyped-up project. The fact that a presidential nominee courted the crypto industry was notable in its own right, which may have led the creators of World Liberty Financial to overestimate the demand for the DeFi protocol supported by Trump and his family.

> "The fact that a presidential candidate is backing this project is really its only differentiator between that and about 10 dozen similar DeFi lending protocols," Tezos CEO Kathleen Breitman told CNBC. "So you know, if you're going to have a differentiator, you might as well have a guy who used to be president."

'The Trump brand…isn't enough for most people'

Many would-be investors were also put off by the token’s non-transferability for the first 12 months, which limits its value in the marketplace. It would take a governance vote to unlock the tokens, and even then, it would only be implemented after a year.

WLF’s stated mission is to democratize access to financial opportunities while "fortifying" the global status of the U.S. dollar, according to the gold paper. The first phase of the project is to launch a version of DeFi lending platform Aave on the Ethereum Layer 2 network Scroll to let users lend and borrow tokens, starting with bitcoin, ether and stablecoins. WLFI will be the protocol's governance token used to vote on decisions regarding the future development of the platform.

> "Whether through connection to a truly unique project, through useful technological features, or just for the LOLs, there needs to be something of value to generate interest," said Rashan Colbert, head of policy at dYdX Trading. "But many crypto proponents have developed some aversion to the continuous politicization of the community and aren’t finding value in uninteresting money grabs."

This sentiment was echoed by Two Prime CEO Alexander Blume, who stated that the platform may have copied code from a previous project the technical team created that was hacked. Dough Finance, co-founded by Zachary Folkman and Chase Herro, suffered a $1.8 million flash loan attack in July.

> "I haven't seen anything interesting or unique about this aside from the fact that it has the Trump brand. I don’t think that’s enough for most people," Blume said. "I think the crypto community was already pretty skeptical of this project before it was launched. It just seems opportunistic, particularly since it’s not doing anything new."

Rumi Morales, partner and board member of Outlier Ventures, noted further issues at play, pointing out that the gold paper "seemed rushed and full of errors," as well as the non-transferable nature of the token.

WLFI was reportedly only available to accredited investors within the U.S., qualified investors in the UK, and investors outside those countries. However, the current gold paper suggests the tokens are only available for persons outside of the United States.

> "People who are super active in today’s market, even with its challenges, are experienced and savvy," Morales stated in an email to The Block. "They know how to spot opportunity versus gamesmanship, and they are not lemmings or newbies. This WLF launch might have had a shot during the less discerning days of the 2017 ICO boom or even during the 2020 DeFi Summer — but we’re years past that now. It seems like the WLF team hasn’t realized how sharp and sophisticated the community is — and that we think for ourselves."

Bitwise Chief Investment Officer Matt Hougan commented, "In DeFi, utility matters. WLF struck me as a meme masquerading as a utility project. I think people recognized that and so it didn't take. DeFi also can't be personality-focused. That's where the 'De' comes from. And so, a personality-focused DeFi project is just a little oil and water."

Election Day Draws Near

With the 2024 U.S. presidential election less than a month away, nationwide polls are still split between Trump and Vice President Kamala Harris, but the betting markets indicate a favorite.

Polymarket bettors have upped the ante on a Trump win, with the Republican candidate's chance of winning now exceeding 62% on the prediction market compared to Harris’ 38% – the highest spread yet between the two candidates.

Trump's stance on cryptocurrency shifted in May when his campaign started accepting crypto donations. He has since met with mining executives and emphasized his desire to make the U.S. "the crypto capital" of the world.

During a campaign stop last month, Trump visited PubKey Bar in New York City and made what’s believed to be the first bitcoin purchase ever by a U.S. president.

The WLF project was initially teased on Aug. 7 by Donald Trump Jr. and Eric Trump. Steven Zheng from The Block Research first noted the connection between the Trump project and Dough Finance.

Notably, WLF's gold paper highlighted that the first $30 million of "net protocol revenues" would cover various expenses. Beyond that, the majority of the funds would be allocated to "DT Marks DEFI LLC," a company owned by Trump and his associates, which was also set to receive 22.5 billion WLFI tokens, with an estimated value of around $337 million.

> "Everything this man touches is a grift, and his newfound policy stance is no different," crypto-friendly Democrat Rep. Wiley Nickel of North Carolina stated in September. "For those of us who have worked to advance crypto innovations through real bipartisan action, Trump’s involvement does nothing but harm serious efforts to build a secure and regulated future for digital assets."