What is World Liberty Financial?

This article introduces the Trump-related DeFi project World Liberty Financial, and points out several alarming risks: lack of financial rights, uncertainty around tradability, and the potential loss of the Trump brand association.

Introduction

World Liberty Financial (WLF) is a new decentralized finance (DeFi) platform spearheaded by Donald Trump and his family. WLF aims to offer financial services such as borrowing, lending, and earning interest on cryptocurrencies using 3rd party DeFi applications. The platform operates with a governance token called WLFI, enabling users to participate in decision-making regarding the platform’s future.

WLF stands out due to its high-profile association with Trump and the project’s ambitious goal of promoting financial inclusion. While DeFi projects are common, WLF is particularly significant because of its timing—coinciding with Trump’s 2024 presidential campaign. The project has attracted attention from both supporters and critics, given its potential influence in both the political and crypto spheres.

Donald Trump’s involvement has generated both excitement and controversy. His pivot toward cryptocurrency is seen as a strategy to attract tech-savvy, younger voters during his 2024 presidential run. However, critics have raised concerns about potential conflicts of interest, particularly the overlap between his political ambitions and personal financial ventures through WLF.

Project Overview

World Liberty Financial aims to offer users seamless access to third-party DeFi applications and digital wallet providers, facilitating the acquisition, holding, and transfer of stablecoins and other non-security digital assets. The platform will also integrate liquidity pools, enabling users to supply stablecoins to earn yields or borrow funds by using non-security digital assets as collateral. This structure positions World Liberty Financial as a gateway for users to engage in a range of decentralized financial activities.

As currently disclosed, World Liberty Financial will be built on Aave, a well-known decentralized finance platform, and operates on the Ethereum blockchain. There is currently a temperature check proposal to launch on Aave v3 for approval by Aave DAO.

The platform will focus on user experience (UX) and user interface (UI) design, ensuring first-time users can navigate seamlessly, minimizing the complexity often associated with DeFi.

Team

According to the supporting team section in the documentation, the role of the Trump family in this project is primarily as supporters and advocates. The founders of World Liberty Financial are Zak Folkman and Chase Herro, who are the real controllers and the sole directors and members of the organization. They also serve as the sole signers of the protocol’s Multi-Sig Wallet, ensuring their exclusive control over the project’s financial operations.

According to various media reports, the backgrounds of Zak Folkman and Chase Herro is controversial.

• Zak Folkman has a controversial history, previously known for running a company called Date Hotter Girls LLC, where he conducted seminars aimed at teaching men how to attract women. He has also co-founded Dough Finance, which faced significant issues, including a hack that resulted in the loss of over $2 million in customer funds.
• Chase Herro, who previously went to prison for drug-related charges, is also the founder of a defunct crypto trading firm Pacer Capital, and was one of the people who built Dough Finance.

Protocol Revenue Distribution

The protocol has clearly stated that token holders will not receive any financial interest from the project. Instead, protocol revenues will be distributed among several companies according to the disclosed information. 75% of the net revenue will go to a Trump-owned company, DT Marks DEFI LLC, while the remaining 25% will be allocated to Axiom Management Group, a Puerto Rico-based company owned by Chase Herro and Zak Folkman.

The Trump Brand

The popularity of the WLF protocol largely depends on its association with former President Donald Trump. WLF has entered into a service agreement with DT Marks DEFI LLC, which allows the protocol to align its brand with Trump. However, DT Marks DEFI LLC retains the right to terminate the agreement under certain "cause" events or by choosing not to renew the agreement at the end of its five-year term. If this occurs, WLF would need to undergo a rebranding process.

This means that although the project appears to be closely linked to Trump, his involvement is clearly defined and limited. The connection could end under specific circumstances.

WLFI Token

The WLFI token, central to the World Liberty Financial (WLF) ecosystem, is designed to facilitate governance and operational activities within the platform. WLFI tokens grant holders the right to vote on certain protocol matters, including setting new parameters and making strategic decisions regarding the platform’s development

However, while the WLFI token confers voting rights, the project makes it clear that WLFI is not a DAO token, and World Liberty Financial is not a decentralized autonomous organization (DAO). Instead, World Liberty Financial is a Delaware-registered non-stock corporation with a board of directors. As a non-stock corporation, it does not have shareholders; rather, it has members, who are currently the board of directors.

This distinction means that from a legal standpoint, the WLFI token does not confer any financial interest in the corporation. Additionally, WLFI holders are not considered members of World Liberty Financial and therefore have no direct ownership or financial stake in the company.

Furthermore, all WLFI tokens will be non-transferable and locked indefinitely in a wallet or smart contract. These tokens will remain locked unless they are unlocked through a governance procedure, provided that such an action complies with applicable law.

Token Allocation and Public Sale

The total supply of WLFI tokens is set at 100 billion, allocated as follows:

• 35% (35 billion tokens) for public sale.
• 32.5% for community growth and incentives: this allocation is planned to be reserved for expanding participation in the governance of the WLF community and for building the protocol.
• 30% for initial supporter allocation
• 2.5% for the team and advisors

The public sale began on October 15, 2024, with a target to raise $300 million by offering 20% (or 20 billion tokens) at a price of $0.015 per WLFI token. This sets the public sale valuation of WLFI at $1.5 billion.

Final Thoughts

While World Liberty Financial (WLF) has garnered significant attention in the crypto market due to its connection with the Trump family, WLFI token holders do not have many rights or benefits, as outlined in the analysis. The token's primary function is governance, giving holders a voice in certain protocol decisions, but it does not confer any financial benefits, either now or in the future. All potential revenue from the project has already been allocated to Trump and the founders' related companies.

Additionally, the WLFI token is currently non-transferable, and there is no clear timeline for when it might become tradable. As a result, no exchanges are expected to list the token in the foreseeable future. Adding to this uncertainty is the fact that the project's connection to the Trump brand is secured through a five-year service agreement with DT Marks DEFI LLC, which could be terminated under certain conditions. This introduces additional risk for WLFI token holders.

These factors—lack of financial rights, uncertainty around tradability, and the potential loss of the Trump brand association—contribute to the high-risk nature of the WLFI token.