The details of a new crypto project backed by the Trump brand have been announced.
The details of a new crypto project backed by the Trump brand have been announced. Read More Crypto Projects
The details of a new crypto project backed by the Trump brand have been announced as part of a lengthy live event on X. The purpose of the crypto initiative, called World Liberty Financial, is still murky; event hosts spoke about the erosion of trust in banks and the need for the U.S. to stay at the forefront of financial innovation, but no clear message was conveyed about how World Liberty Financial would approach those problems.
On the other hand, much of the audience, which peaked at over 50,000 listeners, was likely more interested in finding out when, how, and where to invest.
WLFI Token: Availability and Access
The answer: A governance token called WLFI will be sold on public exchanges. Governance tokens typically allow holders to vote on changes or improvements to a project’s protocol, financial decisions, and future developments. While this project claims to emphasize decentralization and fairness, several important details warrant a more cautious, fact-based look.
The governance token will be available through a regulated Know Your Customer (KYC) process in the U.S., with participation limited to accredited investors. In order to qualify, individuals must meet certain income or net worth thresholds, as per U.S. financial regulations. This restricts the token’s availability to high-net-worth individuals or institutions, which will limit its access to a broad audience.
The token will also be available internationally, but as of now, specifics regarding how international buyers can participate remain unclear.
Event hosts placed significant emphasis on the fairness of its token distribution model. Approximately 63% of the tokens will be sold to the public, with claims that there will be no early buy-ins or insider deals – a notable departure from the norm in the cryptocurrency world, where early investors often secure tokens at lower prices or through private sales before public access.
In addition to the public sale, 17% of the tokens will be reserved for user rewards. These rewards are intended to incentivize user participation, whether through governance voting, staking, or using the platform’s services. While this can help build a dedicated user base, it’s uncertain how these rewards will be distributed over time and whether they’ll create real value for users.
The remaining 20% of the token supply will be allocated for the team, advisers, and future hires. While team and adviser compensation is common in the industry, this allocation does represent a significant portion of the total token supply. Investors should consider whether this distribution aligns with their expectations of a fair balance between public ownership and insider control.
The project’s governance system includes a notable restriction: no individual or entity can control more than 5% of the voting power, regardless of how many tokens they hold. This measure is intended to prevent the centralization of control and ensure a more democratic decision-making process, where no single entity can dominate the platform’s direction.
Michael Saylor Reference: Misleading Marketing?
One aspect of the event that is raising eyebrows is how the project is being framed, particularly in its promotion of crypto as a hedge against physical assets subject to entropy (essentially, the inevitable wear and decay of physical goods over time). During the event, one of the participants explained that crypto can be used as a hedge against other forms of “brick and mortar” assets. He noted that Michael Saylor, CEO of MicroStrategy (MSTR), made a compelling case for this concept during one of his presentations at the BitcoinBitcoin
2024 conference.
However, Saylor’s argument was centered on bitcoin, not on crypto in general. Michael Saylor might be the last person on Earth who would cast bitcoin and crypto as being equivalent. This subtle shift from discussing bitcoin – a decentralized, scarce digital asset with unique properties that make it an effective store of value – to lumping it together with a governance token project, is misleading. Bitcoin is nobody’s liability – it is an open monetary network that has no leader, no marketing team, and no insiders.
By contrast, the value of new crypto tokens is highly speculative, and almost always ends in failure. Even Ethereum, the most successful crypto project by far (besides bitcoin) is seeing its exchange rate with bitcoin tank. Using Saylor’s reputation and his defense of bitcoin to imply the same qualities apply to this speculative crypto token is, at best, disingenuous and, at worst, deliberately deceptive.
This tactic risks creating a false equivalence between bitcoin’s proven usefulness as a digital bearer asset and hype-fueled crypto projects. Such framing could mislead investors into believing they are buying into something with similar credibility and security when, in reality, the two are vastly different.
Time will tell whether the project lives up to its promises of fairness and decentralization, but for now, caution is the wisest approach.