Less than a day after its Labor Day debut, WLFI — the governance token for World Liberty Financial — plunged amid a surge in trading. The token fell from a high of $0.33 to about $0.21 before settling near $0.245, while 24-hour volume jumped from roughly $259 million at launch to about $2.5 billion (CoinGecko).
A governance proposal posted to the project’s forum seeks to redirect 100% of fees from protocol-owned liquidity pools on Ethereum, BSC, and Solana to open-market WLFI buybacks that would be immediately sent to a burn address. The proposal frames this as a measure of direct supply reduction, tying token burns to network activity: more usage = more fees = more WLFI burned.
Analysts welcomed the mechanics but warned the real-world impact may be muted. Min Jung of Presto said the buyback-and-burn approach can offer structural support but may be limited by WLFI’s high implied valuation, low circulating supply, and large upcoming token unlocks that could overwhelm burn volumes. Ryan Yoon of Tiger Research said the mechanism should theoretically support token value, but noted WLFI currently generates little fee revenue because its core platform has not yet launched.
World Liberty Financial positions itself as a DeFi lending and borrowing project and has already issued a dollar-pegged stablecoin, USD1, which ranks among the largest stablecoins by market cap. The venture — co-founded by nine figures including former U.S. President Donald Trump — has attracted political scrutiny after disclosures of personal gains and high-profile partnerships.
If passed, the proposal would more tightly link usage to supply reduction. However, market participants should treat any price support as uncertain given tokenomics, upcoming unlocks and current demand risks. Risk reminder: token prices are volatile; buybacks and burns do not guarantee gains and may reduce funds available for product development and ecosystem growth.
Source: Decrypt. Read the original coverage for full details.