Trump Crypto Project Submits Proposal to Ethereum DeFi Giant Aave

Author: Sander Lutz; Translated by: Vernacular Blockchain

Former President Donald Trump's long-rumored decentralized finance (DeFi) project is slowly surfacing, with more details coming to light today.

On Wednesday, World Liberty Financial submitted a proposal to the governance forum of Aave, the Ethereum DeFi platform on which Trump and his business partners plan to build their crypto products.

The project proposes to launch its service as an instance on Aave, meaning that the popular DeFi protocol will provide the infrastructure that will support the operation of World Liberty. In return, AaveDAO (an organization composed of Aave Token holders responsible for governing the platform) will receive 20% of all protocol fees generated by World Liberty and 7% of the supply of the project's governance token WLFI.

Although WLFI was initially described as "non-transferable," Wednesday's proposal states that users will receive the token as a reward for participating in World Liberty's liquidity pool. However, it is unclear how the project will be able to have AaveDAO custody WLFI tokens and distribute them to users if the tokens are indeed non-transferable. Representatives from World Liberty Financial did not immediately respond to Decrypt's request for comment.

AaveDAO community members will now discuss the proposal and decide whether to vote to allow Trump and his partners to build their DeFi products on Aave's decentralized lending protocol. WLFI holders will also need to approve the plan separately.

The proposal also revealed that World Liberty will initially allow deposits of Ethereum (ETH), Wrapped Bitcoin (WBTC), and popular stablecoins USDC and USDT. The project said it would initially focus on providing stablecoin liquidity for ETH and WBTC, with a particular focus on attracting first-time DeFi users — presumably those familiar with the Trump brand but less familiar with the complexities of liquidity pools and digital asset lending.

Last month, Trump and several partners, including his sons Eric and Donald Jr., and another New York billionaire, Steve Witkoff, announced the launch of World Liberty. The project will provide cryptocurrency lending services on the Ethereum blockchain network, similar to the large number of existing applications in DeFi such as Aave.

Both then and now, the World Liberty team has doubled down on promoting the project as a more "user-friendly" alternative to existing DeFi options such as Aave, whose interfaces often require a high level of technical knowledge to use successfully. In its pitch to AaveDAO members, the World Liberty team promised that their project could "bring a large number of new users and new liquidity to Aave."

There are still many unknowns about the World Liberty project, especially how it will work and where it will be available. At the end of September, the project opened up whitelisting, allowing specific Americans - qualified investors only - to purchase WLFI tokens. According to relevant regulations of the US Securities and Exchange Commission (SEC), these tokens can only be provided to particularly wealthy or knowledgeable investors to reduce risks.

There are still some questions about the World Liberty instance on Aave - even if the proposal is approved and finally goes live. Previously, the World Liberty team said that they planned to allow all Americans to use the platform "in the future."

However, the project team confirmed to Decrypt that the proposed World Liberty Aave instance will be open to all Aave users - which means that Americans can indeed use it.

But this plan is not without risks. Other similar US DeFi protocols, such as Uniswap, have received notices from the SEC in recent months that it plans to file a lawsuit against it for allegedly offering illegal and unregistered securities.