With crypto continuing to remain a front-and-center issue in U.S. political circles, including the nomination of a pro-crypto challenger to Senator Elizabeth Warren, it should come as no surprise that policymakers are wading more directly into the sector. Specifically, former President (and current candidate) Donald Trump has been making public and forceful forays to the crypto sector, seemingly a reflection of the massive spending that the crypto industry has invested into current races. The latest example of this is the coming launch of World Liberty Financial, a crypto project founded, supported, and endorsed by the current Presidential candidate.
While specifics remain somewhat difficult to pin down, with some versions the whitepaper becoming available, there is still plenty to digest and work through as the project comes to light. As with most thing involving former President Trump, however, there has been some controversy and drama around the launch of the project. Specifically the X account of Laura Trump, daughter in-law of the former President and Republican National Committee co-chair, appeared to be hacked and disseminated false information regarding the launch of the project as well as malicious links to a coin claiming to the be the official coin of the project. Setting aside these hiccups and drama, however, it is indicative of the strength inf the crypto sector that a Presidential candidate from a major U.S. political party is launching a project in the middle of a campaign.
Let’s take a look at items crypto investors should keep in mind as the project continues to move forward to launch.
Security Should Be A Top Concern
Any project that is led by such as high-profile figure, such as the former President, is bound to attract substantial amounts of attention from investors and policymakers, but also criminal actors looking to exploit weaknesses in the underlying infrastructure and cybersecurity. Analysis of the components and versions of the whitepaper that have been leaked to date indicate that the technical underpinnings of World Liberty Financial are very similar to those that supported Dough Finance. In July 2024 Dough Finance was hacked via exploiting flash loan transactions focusing on vulnerable smart contracts. Although the founding team, including members of the Trump family as well as the technical team, have emphasized that security will be front-and-center for this venture, the technical similarities should be cause for further examination.
Additionally the fact that details and pieces of information are being continuously leaked prior to the project launch leaves the team and project itself open to the array of hacking and impersonation scams that have already occurred.
Centralization Will Be Front And Center
Mirroring many of the crypto products and services that have deployed since 2022 a defining characteristic of World Liberty Financial, according to the whitepaper that has been circulated, is that 70% of WLFI – the governance token – will be held by the founders, team, and service providers. Centralization and this level of concentrated control is, of course, the opposite of the original ideas behind the crypto movement, but do track with the centralization that has occurred in the staking, stablecoin, and ETF slices of the crypto landscape. For context, Ethereum’s Genesis block reserves a combined 16.6% of ether for the Ethereum Foundation and early contributors, Cardano founders retained 20% of ADA and Satoshi Nakamoto holds approximately 5% of total bitcoin supply.
While the final whitepaper and tokenomics are yet to be disclosed, the level of centralization of governance tokens is worth noting for investors looking to both invest and/or exercise voting power through acquisition of WLFI tokens.
Stablecoins Feature Prominently
Since the final tokenomics and whitepaper have yet to be publicly disclosed the mission and business model of World Liberty Financial remains a matter of speculation versus fact. That said, both the former President and project representatives have reiterated the goal of establishing the United States as the crypto capital of the planet. One avenue that has been publicly disclosed as part of that goal is the aspiration of the project to embrace stablecoins alongside the WLFI governance token.
Building on comments from former President Trump regarding the position of the U.S. as an economic leader and crypto hub, combined with the fact that over 90% of stablecoins are backed on a 1:1 basis by the dollar and these statements seem in alignment. Specifics related to which stablecoins will be integrated are forthcoming, but it is yet another indication of the growing importance of stablecoins to the crypto space.
Regardless of how World Liberty Financial works out, this project will continue to elevate crypto in terms of mainstream coverage and investor understanding.
