Throughout history, the combination of power and capital is nothing new. From the conscription system in ancient China to the Senate elections in the Roman Empire, to the presidential elections in modern countries, every struggle for power is almost accompanied by huge financial operations. Whether it is Cao Cao issuing "military fields" to raise war funds during the Three Kingdoms period, or American politicians relying on political donations and contributions in their campaigns, the game of money and power has never stopped.
Today, in the new era driven by technology, this traditional capital game is taking on a new form - through decentralized finance (DeFi) and cryptocurrency. World Liberty Financial (WLFI), a crypto project launched by the Trump family, is an attempt to combine capital and technology in this context. As a project launched when Trump's campaign was short of funds, WLFI is not only a technological innovation, but also a highly politicized capital operation.
Next, we will analyze in detail the background, structure and major risks of this project, as well as the reasons why the Trump team took the risk to launch the project at this sensitive time.
1. Project timeline: rapid progress from announcement to implementation
WLFI's first tweet on August 26
On August 29, 2024, Trump’s son Eric Trump announced the official launch of World Liberty Financial, calling it “the arrival of a new era of finance,” symbolizing the Trump family’s official entry into the field of cryptocurrency.
On September 4, 2024, CoinDesk disclosed the details of the project's white paper, confirming that WLFI will be built on the Ethereum blockchain and the Aave lending protocol to provide decentralized lending services. The project aims to automate lending operations through smart contracts.
On September 16, 2024, the Trump family officially announced the launch of World Liberty Financial. Trump promoted it on social media, calling it the "future finance" that would solve the slow and outdated problems of traditional banks.
On September 18, 2024, in a highly anticipated live broadcast, the project team confirmed that WLFI will conduct a token sale through Regulation D terms, limited to qualified investors. Of the token distribution of WLFI, 63% will be sold publicly, 17% will be used for user rewards, and 20% will be reserved for the team.
On September 25, 2024, the project team announced the addition of a series of technical advisors, including Mixie AI CEO Matthew Morgan, further enhancing the technical background.
On October 2, 2024, WLFI began whitelist registration and launched KYC (Know Your Customer) certification, but due to regulatory restrictions, ordinary users cannot participate and only qualified investors can purchase tokens.
On October 8, 2024, the WLFI team announced that the token sale will be launched soon and will be open to investors who have passed the whitelist certification.
This timeline shows the speed of WLFI's development, especially as Trump's campaign approached, and the accelerated implementation of this project was closely related to the fundraising needs of the election.
2. Financial revolution or marketing gimmick? WLFI’s vision conflicts with reality
On October 8, the WLFI team announced that the token sale will start soon
Original intention: a beautiful blueprint for decentralized finance
World Liberty Financial's promotion focuses on the concept of decentralized finance, aiming to break the barriers of the traditional banking system through DeFi and provide financial services to those who cannot access traditional banking services. At the same time, the project also claims to use the disintermediation of DeFi technology to reduce user costs and simplify the lending process. The white paper mentions that WLFI will rely on the Ethereum blockchain and Aave lending platform to build its lending system, and maintain the dominance of the US dollar in the global financial system through stablecoins pegged to the US dollar.
On August 29, Trump released a video about the DeFi project World Liberty on Twitter, and said in the video, "Today I have made a plan to make the United States the crypto capital of the planet. We will never let those people who want to strangle you and bankrupt you, let them do so."
Reality: The game between business and politics
Views from WLFI founder Eric Trump
A series of problems were exposed in the actual design of WLFI. The governance token WLFI of the project is a non-transferable token. Investors cannot make profits through market transactions. The only function of the token is to be used for platform governance - that is, to influence the development direction of the project through voting. Of the token distribution of WLFI, 63% is restricted to sale through Regulation D, 17% is used to reward users, and 20% belongs to the team.
According to SEC regulations, only "qualified investors" with an annual income of more than $200,000 or a net worth of more than $1 million are eligible to participate in the token sales of Regulation D projects. This rule limits the user coverage of WLFI, especially in the context of DeFi platforms usually selling openness and decentralization, the design of WLFI appears to be too conservative and closed.
This is in stark contrast to the governance token design of other mainstream DeFi projects on the market. For example, the governance tokens of Compound and MakerDAO are not only freely tradable, but also bring economic returns to investors through market liquidity. The non-transferability of WLFI makes the token less attractive to investors and weakens the motivation of users to participate.
In this case, WLFI is more like a fundraising tool to attract high-net-worth individuals rather than an open decentralized financial platform, and even runs counter to Trump’s own goal of inclusive finance.
3. Political fundraising and the Trump family’s financial difficulties
The WLFI project is not only a cryptocurrency project, but the political considerations behind it are also crucial. The Trump team faces a serious shortage of funds in the 2024 campaign, which has prompted them to look for new ways to raise funds. The launch of WLFI is precisely to solve this funding dilemma.
The huge gap in campaign funding
According to POLITICO, as of October 2024, Democratic candidate Harris' team has far surpassed Trump's team in fundraising. Harris' team raised $770 million, while Trump's team only raised $570 million, and Harris' team has invested $440 million in campaign propaganda, while Trump's team has only spent $310 million.
The Trump campaign is also behind the pace of fundraising in 2020. In October 2020, Trump's presidential campaign and the Republican National Committee announced that they had raised $250 million in September. The hundreds of millions of dollars raised by each campaign go toward buying expensive political ads.
This funding gap puts the Trump team at a clear disadvantage, especially as the election approaches, where insufficient funds will directly affect its campaign effectiveness. Unlike Harris, who attracted support from tech giants such as Reid Hoffman and Reed Hastings, Trump's donors mostly come from traditional industries, such as energy and finance.
In order to fill this funding gap, the Trump team has opened up a new fundraising channel in the field of cryptocurrency through the WLFI project. Cryptocurrency allows for more flexible fund operations within the scope of legal supervision, especially Regulation D, which allows qualified investors to conduct private placements, which means that the Trump team can directly raise funds through token sales. For investors, buying WLFI tokens is not only an economic investment, but also a political bet on Trump's election.
4. Technical architecture and encryption risks: the combination of Ethereum and Aave
In the global DeFi field, WLFI faces fierce competition. According to Deflama data, as of press time, the total value locked (TVL) of the global DeFi market has exceeded US$82 billion. This figure reflects the widespread application and development potential of decentralized finance around the world. However, as a new project, WLFI must face competition from established DeFi platforms that have dominated the market, such as Aave, Compound, and MakerDAO (now renamed SKY).
It is worth noting that the technical architecture of World Liberty Financial (WLFI) relies on the Ethereum blockchain and the Aave lending protocol. This combination shows the project's strategic choice of technology, using the existing DeFi infrastructure to quickly build a decentralized financial service platform.
WLFI chose Ethereum to take advantage of its proven smart contract capabilities and broad developer support. However, Ethereum also faces some problems, especially scalability and transaction fees. When the network load is high, transaction fees (gas fees) may be extremely expensive, and transaction processing speed will also drop significantly, affecting user experience.
In addition, Aave's flexibility also brings certain smart contract risks, especially vulnerability exploits related to hacker attacks. The hacker attack incident in early 2024 has attracted market attention to the security of the project. Whether WLFI can avoid similar vulnerability exploits and ensure the security of its smart contracts will be the key to its success or failure.
5. Team and background: complex interweaving of interests
World Liberty Financial (WLFI) is not only backed by the Trump family, but also promoted by some financial and crypto figures with complex backgrounds. Its core team members Zachary Folkman and Chase Herro co-founded Dough Finance, but the platform was hacked in July 2024 and lost $2 million. The attack not only caused financial losses to the platform, but also had a negative impact on the reputation of Folkman and Herro, causing the market to question the technical capabilities and security of their new project WLFI.
Complex backgrounds of team members
Chase Herro's personal background, in particular, adds more complexity to the project. Herro is not a well-known figure in the cryptocurrency circle. He is known for showing off luxury cars, private jets and a luxurious lifestyle, but has rarely made significant achievements in the field of digital assets. The token that Herro promoted on the podcast of Internet celebrity Logan Paul plummeted in value by 96% after it went online. In a speech in 2018, Herro called himself "an asshole on the Internet" and said that regulators should "clean up assholes like me." He has a frivolous attitude towards cryptocurrency and once mentioned in a YouTube video: "If the story is attractive enough, you can even put feces in a can, wrap it in urine, and add a layer of human skin, and then people will pay $1 billion to buy it." This statement has exacerbated people's doubts about his leadership of the project.
Joining the Consultant Team
Although the backgrounds of the core development team members are somewhat controversial, WLFI's advisory team is full of experienced technical experts.
Ogle, an anonymous security expert who co-founded Glue Blockchain and recently joined WLFI as an advisor, stressed that the compensation for being an advisor to the project is insignificant to him and will not have a substantial impact on his life even if the project reaches a valuation of $50 billion.
In addition to Ogle, Corey Caplan, co-founder of Dolomite Money Markets, has joined the team as an advisor.
In addition, today Binance Launchpool just launched Ethereum's second-layer blockchain Scroll, and its co-founder Sandy Peng also joined WLFI's advisory team.
On September 25, Mixie AI CEO Matthew Morgan joined the team, further adding to the technical strength. Morgan has been active in the crypto community since 2016 and has a rich background in game development and blockchain. On September 27, Tomo Wallet founder Ryan Fang also joined the advisory team.
Although some members of the WLFI team have been questioned for their involvement in other projects, the overall advisory team is strong. The diverse backgrounds and complex history of the team make the success of WLFI a widely watched issue, but it also has certain technical and industry support, which makes the project have promising development space in the future.
6. Conclusion: The other side of the capital game
World Liberty Financial seems to be a project that breaks the barriers of traditional finance through decentralized finance, but behind it is a game of capital and politics. Although the vision of DeFi is to provide inclusive finance and reduce intermediary costs, the design and operation model of WLFI is more of a tool for high-net-worth individuals and political fundraising. The future of this project depends not only on whether its technical architecture can gain a foothold in the fierce competition, but also on whether the Trump team can gain more support in political fundraising through cryptocurrency projects.
Regardless of the success or failure of WLFI, it reveals the role that cryptocurrencies may play in the future political and financial fields. For the Trump team, WLFI is a high-risk attempt; for the market and investors, it is more like a capital game with political colors. The game of finance has never been so complicated, and there are always only a few winners.
