Ethereum Lending Service by Trump: Exploring Token Features
Donald Trump’s renowned cryptocurrency venture, World Liberty Financial (WLFI), is set to introduce borrowing and lending services for digital currencies on the Ethereum blockchain. These services will function akin to decentralized finance (DeFi) applications, enabling financial transactions without the need for intermediaries such as traditional banks. The primary objective of Trump’s initiative is to establish a more user-friendly alternative to existing DeFi platforms by utilizing a non-transferable governance token known as WLFI.
The project, spearheaded by operations chief Zak Folkman and data and strategy head Chase Herro, recently disclosed its token distribution strategy, confirming that the token sale of WLFI will be overseen by the U.S. Securities and Exchange Commission (SEC). Folkman highlighted the equitable nature of the token distribution process, emphasizing the absence of pre-sales, venture capital investments, or early buy-ins. This approach aligns with the fair token distribution model typical of contemporary DeFi projects.
According to Decrypt, the project’s white paper outlines that approximately 62.66% of the WLFI token supply endorsed by Donald Trump will be made available in an upcoming token sale. A segment of the proceeds will be channeled into the project’s multi-signature (multisig) wallet treasury reserve, with the remainder allocated to the founders, team members, and service providers. Furthermore, around 17.33% of the token supply will be reserved to incentivize community engagement and growth within World Liberty’s governance framework. The remaining 20% will be distributed among the project’s team, advisors, and future recruits, with undisclosed portions earmarked for the WLF Foundation, Trump Organization affiliates, and the Witkoff Group led by Trump ally Steve Witkoff.
Contrary to earlier reports suggesting that insiders would receive 70% of the token supply in Trump’s crypto venture, a source familiar with the project refuted these claims as “inaccurate,” without providing further elaboration. An updated draft of the white paper revealed revised token allocations, indicating potential alterations as the project progresses. Notably, WLFI tokens will be sold under SEC Rule 506(c) of Regulation D, categorizing them as “unregistered securities” accessible exclusively to accredited investors meeting specific financial thresholds.
Accredited investors, as defined by the SEC, must meet stringent financial criteria, including earning a minimum of $200,000 annually, a combined annual income of $300,000 with a spouse, or possessing a net worth exceeding $1 million, excluding their primary residence. Purchasers of WLFI tokens will undergo a “know your customer” (KYC) verification process akin to protocols followed by major cryptocurrency exchanges like Binance, Coinbase, and Kraken. While WLFI tokens are not intended to be classified as securities, their offering under Regulation D ensures compliance with U.S. crypto regulations amidst increasing regulatory scrutiny of DeFi projects.
