70% WLFI Tokens in Hands of Insiders

World Liberty Financial, the new crypto lending platform endorsed by former United States (US) President Donald Trump and his sons, markets itself as a solution to the "rigged" traditional finance system and a means to "return financial power to the people."

However, a draft white paper obtained by CoinDesk reveals that 70% of WLFI, the project's governance token, will be controlled by insiders, including the founders, team, and service providers.

This concentration of power is notably high compared to other projects; for example, Ethereum reserved 16.6% of its initial ether supply for early contributors, Cardano retained 20% of ADA, and Bitcoin's creator Satoshi Nakamoto holds an estimated 5% of the total supply.

The remaining 30% of WLFI will be sold to the public, with a portion of those funds also going to insiders, while some will be reserved in a treasury to support operations.

World Liberty Financial spokesman Jim Redner explained:

"The team is working with a lot of contributors, and we're not quite sure which version [of the white paper] you are referring to at the moment, but they have not finalized their tokenomics yet. All the information we've shared so far that is final/approved can be found on WLF's Twitter (X) and Telegram. Those will be the main channels for any announcements."

This allocation raises concerns about whether World Liberty Financial is leveraging the Trump family's fame for personal gain rather than genuinely advancing a novel decentralised finance (DeFi) platform.

The effectiveness of the project in fulfilling its ambitious promises may be questioned if a significant portion of funds is retained by insiders rather than invested back into the platform’s growth.

WLFI Tokens Locked Indefinitely in Wallet & Non-Transferable

World Liberty Financial's strategy diverges from the standard ICO model by introducing a non-transferable WLFI token, which cannot be traded between users.

This restriction is likely designed to shield the platform from potential securities law violations.

According to the white paper:

"All $WLFI will be non-transferable and locked indefinitely in a wallet or smart contract until such time, if ever, $WLFI are unlocked through protocol governance procedures in a manner that does not contravene applicable law."

It adds on:

"Each purchaser of $WLFI will be screened to ensure that no specially designated nationals or other persons sanctioned by FinCen are permitted to purchase $WLFI."

Trump's Supporters Warn WIFL Could Backfire

Trump's World Liberty Financial aims to gain traction in the blockchain industry, but even some of his supporters express concerns that the initiative might backfire.

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Nic Carter, a notable crypto figure and Trump ally, has raised questions on X (formerly Twitter) about the project's viability.

He added:

"I think it genuinely damages trump's electoral prospects, especially if it gets hacked (it'll be the juiciest DeFi target ever and it's forked from a protocol that itself was hacked). It's also an obvious target for the SEC. at best it's an unnecessary distraction, at worst it's a huge embarrassment and source of (additional) legal trouble. So are we signing a petition or what?"

Despite the project's high profile, scepticism abounds, particularly regarding its security measures, political connections, and ambitious goals.

While assurances of thorough audits by leading blockchain security firms have been made, doubts persist about the project's ability to defend against potential cyber threats.

In the volatile DeFi space, such vulnerabilities can have significant repercussions, and the project's visibility only heightens the risk.

The involvement of Trump and his family has also sparked speculation about whether the project is politically motivated rather than genuinely focused on advancing DeFi.

Ethics watchdogs have voiced concerns about potential conflicts of interest, particularly if Trump were to be re-elected, although some argue that the project's setup does not breach ethics laws despite the questionable optics.