World Liberty Financial Explained: ETH Losses & Political Risks

donald Trump’s crypto project World Liberty 
Financial has been selling ETH despite being   50% down on its investment The craziest part is 
that it’s denied claims that it’s been selling   ETH even though onchain evidence suggests the 
opposite See it’s the opposite Despite the   DeFi protocol literally having the backing of the 
president of the United States many investors are   skeptical about World Liberty Financial and its 
altcoin investments So today we’re going to see   what’s going on My name is Guy and you’re watching 
the Coin Bureau Now then let’s begin with a bit of   context World Liberty Financial is a DeFi protocol 
backed by President Donald Trump which is designed   to let users lend borrow and invest in crypto 
The general idea is to promote the adoption of   DeFi and stable coins in order to strengthen the 
US dollar All in order to quote make crypto and   America great I guess we probably should have seen 
that tagline coming As a fun fact the reason why   World Liberty Financial is targeting stable coin 
adoption is because most stable coins pegged to   the dollar are largely backed by US government 
debt So whenever you buy a stable coin you’re   actually subsidizing the US government spending 
and helping the US dollar maintain its dominance   Now what’s crazy is that World Liberty Financials 
official X account says that quote “We want US   pegged stable coins to remain the world settlement 
layer for the next 100 years.” Translation: We   want US dollar stable coins to become the world’s 
next reserve currency The jury is still out as   to whether that would be bullish or bearish for 
crypto Anyhow World Liberty Financial was created   in September 2024 by two entities affiliated with 
Trump and his family These are DT Marks Defi and   WLF Holdco the latter of which apparently holds 
100% interest in World Liberty Financial Now the   protocol is designed to be accessible even for 
those who have never used crypto before It was   co-founded by developers Chase Herrow and Zachary 
Fulkman both of whom have worked on DeFi protocols   in the past specifically Dough Finance which 
had a similar focus on being user-friendly World   Liberty Financials website also notes the other 
co-founders as Steve Zack and Alex Witkoff from   the Wititov Group a privately held global real 
estate development and investment firm And at   this point it’s important to note that President 
Trump himself isn’t directly involved with the   project In fact the project’s website merely lists 
the president as the chief crypto advocate However   it seems that his sons are more actively involved 
namely Eric Baron and Donald Jr all three of whom   are listed as Web 3 ambassadors Despite the 
Trump ties though the project claims to be   non-political in nature Now it’s also important 
to note that even though the protocol was created   in September last year World Liberty Financial 
hasn’t officially launched yet and we couldn’t   find any future launch date However the protocol 
does have its own native token which we’ll come   back to in a moment What we do know so far is that 
the protocol uses Ave’s V3 framework for borrowing   and lending services and uses chain links oracles 
for real-time price feeds This has raised a few   eyebrows which we’ll come back to later And by 
the way if you’re enjoying the video so far then   hasn’t officially launched yet but there is a 
token called WLFI Ironically though World Liberty   Financials so-called gold paper reveals that WLFI 
isn’t available to investors in the US although   one of the project’s leaders Zack Fulman said it 
would be available to accredited US investors aka   rich people The token’s public sale went live in 
October last year with each token valued at 1.5   More than 100,000 people signed up to the token 
sale prior to its launch However the launch itself   was a bit of a flop with just 4% of the supply 
sold on the first day It wasn’t until January   of this year when 20% of the supply was eventually 
sold at which point the project announced that it   would be selling another 5% of the supply this 
time at 5 cents per token What’s funny is that   they said they made this decision quote due to 
massive demand and overwhelming interest You’ll   recall there wasn’t much interest at the start 
In any case WLFI is an ERC20 token It has a total   supply of 100 billion which are distributed as 
follows 35% are allocated to token sales 32.5% to   community growth and incentives 30% was set aside 
for initial supporters and 2.5% for the team The   project’s website shows that the token sale has 
now ended with the last purchase of WLFI taking   place over a month ago According to Etherscan WLFI 
has more than 85,000 holders What’s concerning   though is that the largest nonsmart contract 
wallet holds more than 15% of the supply Notably   Cointelegraph reported in November that Tron 
founder Justin Sun became the project’s biggest   investor and was later added to its advisory board 
as a result This suggests that he is the WLFI   whale Anyway speculation aside this brings us to 
what WLFI is used for and this is where things get   interesting to say the least That’s because WLFI 
is used for governance with each token accounting   for one vote on proposals But this is where the 
use case ends Controversially WLFI tokens can’t   be sold transferred or traded Moreover the tokens 
also don’t offer any additional economic benefits   such as staking and nor are there any plans to add 
these features at least no plans that are public   yet Now normally DeFi protocols will announce 
that these features will be added later but World   Liberty Financial has made no mention of such 
features yet The project claims that the reason   for this is to align users with the protocol’s 
long-term vision while removing the possibility of   speculative price action However this does raise 
questions of what incentives the team envisioned   with its token distribution and how much demand 
the token can generate In case you haven’t noticed   governance isn’t exactly a great demand driver 
From our perspective it’s possible the real   incentive could be related to the stable coin For 
context World Liberty Financial recently launched   its own stable coin USD1 on BNB and Ethereum 
which isn’t tradable at the time of shooting   According to the accompanying announcement USD1 
is quote 100% backed by short-term US government   treasuries US dollar deposits and other cash 
equivalents However the launch of USD1 has been   met with criticism particularly from Democratic 
senators who have questioned the OC and the   Federal Reserve on how they plan to regulate both 
World Liberty Financial and the USD1 stablecoin   Notably this comes as two critical pieces of 
stable coin regulation make their way through   Congress The Stable Act and the Genius Act both 
of which aim to create clear regulatory frameworks   for stable coins in the US So then this brings 
us to the cryptos that World Liberty Financial   currently holds in its portfolio and what it’s 
been doing with them According to data from Arkham   World Liberty Financial is holding around $100 
million in assets at the time of shooting The   protocol’s largest holding is circles USDC stable 
coin with around $23.5 million USDC According to   Arkham this USDC was first acquired on the 14th 
of October The protocol then acquired around 11   million of Tether’s USDT the following day which 
is interesting As for non-stable coin assets the   protocol’s largest position is in wrapped BTC 
where it currently holds 162.7 WBTC worth roughly   $14 million This wrapped BTC was first purchased 
on the 18th of December and its value has dropped   roughly 20% since then This position is closely 
followed by its holding of almost 8,000 ETH which   is currently worth $12.7 million This was first 
acquired on the 21st of September making it the   platform’s first major purchase However it’s 
fallen by around 37% Notably the protocol also   holds roughly 5,000 Lido staked ETH worth $8 
million So when combined this means that ETH   is technically the protocol’s largest position 
And this STE was first accumulated on Trump’s   inauguration day of the 20th of January and has 
since fallen by 40% Ouch Earlier this month World   Liberty Financial faced allegations that it 
had sold around $8 million worth of ETH which   it later denied describing these allegations as 
simply quote speculation However this doesn’t   seem to be the case Data from Arkham shows that 
not only did a wallet linked to the protocol sell   this ETH but it did so at a loss Specifically the 
ETH in question was purchased for $3,259 per coin   at the start of the year and was sold when ETH’s 
price was just $1,465 That’s a loss of around 55%   In fact by the middle of April World Liberty 
Financial had reportedly spent around $347   million acquiring 11 different altcoins and has 
yet to turn a profit on any of them Data from Look   on Chain revealed that the protocol’s investments 
are down by around $145 million And what’s crazy   is that its Ethereum investments account for $114 
million worth of these losses Now I’ll quickly   note that if you check World Liberty Financials 
portfolio on Arkham you’ll also notice there’s   a bunch of meme coins that have been sent to the 
protocol presumably as a marketing strategy We’ve   blurred these out for obvious reasons Anyways 
back in February World Liberty Financial created   a strategic reserve fund which they aptly 
called the Macro Strategy Fund Very clever   Now the fund primarily consists of BTC ETH 
and a number of altcoins that the team says   are quote at the forefront of reshaping global 
finance The reserve will focus on diversifying   the platform’s assets while creating partnerships 
with the relevant projects for joint marketing and   PR efforts The protocol’s latest addition came in 
early March when Sooie announced it had partnered   with World Liberty Financial As part of the deal 
Sooie was added to the company’s macro strategy   reserve with both entities exploring opportunities 
for development Now this addition wasn’t exactly   surprising Eric Trump is reportedly a Sooie holder 
and is a vocal fan of the project WLF’s co-founder   Zack Fulman said Sooie was selected for its 
Americanborn innovation Keep that in mind for   later Now this brings us to the concerns we have 
around World Liberty Financial And we’re not going   to sugarcoat it folks We have quite a few Our 
biggest concern by far is tokconomics Remember   WLFI tokens are solely used for governance votes 
They’re going to need a bit more than that to make   them an appealing investment Combine this with 
WLFI being unavailable to most US investors and   you start to question how much demand there’ll 
be for the token and by extension the protocol   And this ties into our second concern 
which is the protocol’s revenue structure   That’s because World Liberty Financial directs 
a whopping 75% of its net revenue to the Trump   family This will undoubtedly spark political 
opposition and this puts World Liberty Financial   under the spotlight for regulatory scrutiny The 
protocol could also face further political rivals   in the future who could target it over conflicts 
of interest or even insider trading concerns Our   third concern meanwhile is a lack of innovation As 
many have pointed out World Liberty Financial is   basically just a Trump themed investment vehicle 
repackaging existing a products under the Trump   brand And this ties into our fourth concern 
and that’s an apparent lack of transparency   Now to be clear we’re not saying that World 
Liberty Financial necessarily has anything   to hide But we do seem to be missing some key 
details For example when people began raising   concerns about the amount of ETH the project was 
selling the team responded by using phrases like   quote “No need to speculate.” In our view this is 
akin to saying “Nothing to see here.” Needless to   say this raises a little bit of suspicion So then 
folks this leads us to the allimportant question   How could World Liberty Financial influence the 
crypto market in the future well under the right   conditions the Trumpbacked DeFi protocol could be 
bullish for the crypto industry That’s because it   could spark a wave of speculative investment 
into crypto Logically many of those who were   previously unsure about crypto will perhaps be 
more comfortable investing in the asset class   assuming they’re fans of Trump of course More 
importantly these investors would likely ape into   the cryptos that Trump supposedly endorses i.e the 
ones that make up the protocol’s macro strategy   reserve To refresh your memory these include 
Bitcoin’s BTC Ethereum’s ETH and Tron’s TRX to   name a few At the same time though it’s important 
to note that not much is known about the protocol   and it’s unclear when it’ll even launch It’s also 
safe to say that so far the interest from existing   crypto natives has been lackluster which speaks 
volumes After all many crypto investors have   been carefully watching Trump’s every move in the 
space And not only that but the USD1 stable coin   could actually throw a spanner in the works 
and delay stable coin regulations which have   so far seen bipartisan support That’s simply 
because a Trumpbacked stable coin essentially   adds additional political aspects that could face 
additional opposition That said it’s still early   days and it remains to be seen how much innovation 
the team can deliver The project already has   some impressive partnerships The more these 
partnerships continue to grow the more this opens   the door to World Liberty Financial being able to 
expand its operation And as for the cryptos that   World Liberty Financial acquires in the future 
well it’s safe to say that such an acquisition   would likely be bullish and could pump the price 
of the cryptos in question And remember what we   said earlier the protocol recently teamed up with 
Suie while crediting it for US-born innovation So   this could mean that World Liberty Financial will 
prefer to accumulate American projects And in case   you were wondering which ones they could be well 
you’re in luck We actually have a video all about   that which you can check out right over here Okay 
if you enjoyed that video then you know what to do   Hit up those like and subscribe buttons and 
turn on those notifications too so you don’t   miss our next one If you want to see how many 
Americans are holding crypto and why then you   can check out this video right over here And 
if you want to learn more about the impact   of Trump’s tariffs on the market then you can 
find out by checking out this video right over   here Okay thank you all for watching and we’ll 
see you in the next one This is Guy signing off