- Trump-approved DeFi project World Liberty Financial has had an underwhelming start to its life in the crypto sphere.
- The lending/earning service’s public token sale has raked in approximately US $13m as of writing this article – a long way from the projected US $300m in sales.
- Pundits believe the project’s lack of distinction – outside of ties to ex-president Trump – has caused investors to remain on the sidelines.
- Additionally, strange rules around token liquidity have raised some red flags for potential buyers.
Donald Trump has taken a break from his electoral campaign – which is apparently centred around dancing for 40+ minutes – to endorse the DeFi protocol World Liberty Financial (WLF).
However, following this week’s public token sale, it seems that the presidential candidate should probably remain focused on his dance moves.
The WLF project has gotten off to a horrific start, yielding less than US $10m (AU $14.9m) in its first day of trading. Although that figure has slowly ticked over US $12.5m (AU $18.67m), it is still miles short of the US $300m (AU $450m) target set by the project developers.
We know that Trump has a rabid, dedicated fanbase willing to spend money on his ventures. So why was the response to WLF so cold?
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Trump Branding Not Enough to Distinguish World Liberty Financial From Competitors
The biggest problem for World Liberty Financial is that…it doesn’t exactly do much.
The platform is a run-of-the-mill DeFi protocol that allows users to borrow, lend and earn money on their crypto assets. So basically, it’s just like any other automated lending service except it has the Trump brand of approval.
CEO of open-source blockchain Tezos, Kathleen Breitman, agreed in an interview with CNBC.
The fact that a presidential candidate is backing this project is really its only differentiator between that and about 10 dozen similar DeFi lending protocols.
Kathleen Breitman, Tezos CEOGiven the cult-like status of some of Trump’s fanbase, betting on that point of difference isn’t outrageous. But, despite his popularity, it appears the Trump branding is simply not enough to lift a fairly generic project to new heights.
Illiquid Tokens, Lack of Value and Limited Access: Why WLF Was Always Destined for Failure
It isn’t just World Liberty Financial’s lack of unique value that’s caused a lull in token sales.
For now, the project’s native tokens WLFI aren’t transferable or liquid for 12 months, which means investors can’t sell them on major CEXs or DEXs. This is one of the first warning signs for a rug pull – which we’re not saying WLF is – but it no doubt increased investor wariness.
Additionally, the token sale is only available to accredited investors. So if you have a net worth of less than US $1m (AU $1.49m) you can forget about buying WLFI – which likely eliminates a significant number of prospective investors.
In general, the crypto community does seem to be getting a little fed up with the opportunistic cash-grab-style projects that have come alongside celebrity and political involvement in the industry.
The Head of Policy at dYdX echoed this sentiment.
…many crypto proponents have developed some aversion to the continuous politicization of the community and aren’t finding value in uninteresting money grabs.
Rashan Colbert, dYdX’s Head of PolicyThe consensus seems to be there aren’t enough suckers in the crypto sphere for World Liberty Financial to be successful – at least for now.
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