In brief
- The buyback plan would redirect 100% of fees from protocol-owned liquidity pools across Ethereum, BSC, and Solana.
- Proponents claim that linking fees to token burns enhances scarcity and boosts long-term value for holders.
- Analysts caution the effect may be limited by upcoming unlocks and WLFI’s high valuation.
Less than a day through its Labor Day debut, World Liberty Financial’s WLFI token fell sharply as trading volume swelled nearly tenfold.
The governance token dropped from a high of $0.33 to near $0.21 in late Monday trading before settling at around $0.245, with trading volume increasing from approximately $259 million at launch to $2.5 billion, according to data from CoinGecko.
WLFI is down approximately 14% from its debut price of $0.28, but remains significantly higher for early whitelisted buyers who acquired tokens at around $0.015 each.
In light of recent developments, a governance proposal has appeared, calling for all liquidity fees from the project’s pools to be directed toward buybacks and permanent burns.
Posted on the project’s governance forum, the proposal aims to redirect all fees from protocol-owned liquidity on Ethereum, BSC, and Solana into open-market WLFI purchases, which are then sent to a burn address, thereby permanently reducing the supply.
If approved, WLFI would collect fees from its own liquidity positions on Ethereum, BSC, and Solana, use them to buy tokens back on the market, and send the purchased tokens to a burn address.
The proposal describes this as a measure for “direct supply reduction” that would effectively increase “relative weight for committed long-term holders.” It also links the mechanism to network activity, stating that “more usage = more fees = more WLFI burned.”
However, analysts say the effect may be less decisive when weighed against WLFI’s broader token economics.
“While the buyback-and-burn model can provide structural support for the token price, its overall impact may be limited given WLFI’s large implied valuation and relatively low circulating supply,” Min Jung, senior analyst at quantitative trading firm Presto, told Decrypt.
Jung notes that supply pressures may also outweigh the proposal’s impact.
“The scale of upcoming unlocks is likely to exceed the buyback amount, and with few live products currently driving organic demand, the long-term effect on price stability remains uncertain,” Jung explained.
WLFI’s approach mirrors shareholder-return tactics more common in mature firms than in growth-stage ventures, Jung said.
“In traditional markets, companies with high growth typically reinvest profits rather than prioritizing buybacks or dividends,” he explained. “Allocating all liquidity fees exclusively to burns could limit WLFI’s flexibility to fund product development, ecosystem incentives, or strategic investments.”
But given the scale of WLFI’s fundraising, the treasury may still be “sufficient to support future growth,” he added.
Echoing that sentiment, Ryan Yoon, senior analyst at Tiger Research, told Decrypt the buyback-and-burn mechanism “should theoretically support token value through supply reduction.”
WLFI currently lacks “operational services beyond basic liquidity provision,” which could result in minimal fee generation, Yoon said.
Positioned as a decentralized finance project, World Liberty Financial was designed as a lending and borrowing service, although its core platform has yet to be launched.
The Trump-backed venture has already rolled out a dollar-pegged stablecoin, USD1, which currently ranks as the sixth-largest by market capitalization, according to CoinGecko data.
The project was co-founded by nine individuals, including U.S. President Donald Trump, his three sons, and U.S. special envoy to the Middle East Steven Witkoff, according to its website.
In July, Trump disclosed he had earned a windfall of $57.3 million from the venture. Along with his meme coin deals and an exclusive dinner in April, the president’s links to crypto have stirred controversy in Washington, with some lawmakers claiming possible conflicts of interest.
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