Trump's crypto project submits proposal to Ethereum DeFi giant Aave
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Trump's crypto project submits proposal to Ethereum DeFi giant Aave
Could bring new users and liquidity to Aave, but may face regulatory risks from the SEC.
Navigating Web3 tides with focused insightsBy: Sander Lutz
Translation: Baihua Blockchain
The long-rumored decentralized finance (DeFi) project from former President Donald Trump is slowly coming into view, with more details emerging today.
On Wednesday, World Liberty Financial submitted a proposal to Aave’s governance forum—the Ethereum-based DeFi platform where Trump and his business partners plan to build their crypto product.
The proposal suggests launching its service as an instance on Aave, meaning the popular DeFi protocol would provide the underlying infrastructure supporting World Liberty's operations. In return, AaveDAO—the organization of Aave token holders that governs the platform—would receive 20% of all protocol fees generated by World Liberty, along with 7% of the total supply of the project’s governance token, WLFI.
Although WLFI was initially described as "non-transferable," the Wednesday proposal states users will be rewarded with the token for participating in World Liberty’s liquidity pools. However, it remains unclear how the project could enable AaveDAO to custody and distribute WLFI tokens to users if they 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 on allowing Trump and his partners to build their DeFi product atop Aave’s decentralized lending protocol. WLFI holders will also need to separately approve the plan.
The proposal also reveals that World Liberty will initially accept deposits of Ethereum (ETH), Wrapped Bitcoin (WBTC), and the popular stablecoins USDC and USDT. The project says it will initially focus on providing stablecoin liquidity for ETH and WBTC, specifically aiming to attract first-time DeFi users—likely those familiar with the Trump brand but less versed in the complexities of liquidity pools and digital asset lending.
Last month, Trump and several partners—including his sons Eric and Don Jr., as well as New York billionaire Steve Witkoff—announced the launch of World Liberty. The project will offer cryptocurrency lending services on the Ethereum blockchain, similar to many existing applications within DeFi such as Aave.
Both then and now, the World Liberty team has emphasized the project as a more “user-friendly” alternative to existing DeFi options like Aave, whose interfaces often require substantial technical knowledge to navigate. When pitching to AaveDAO members, the team promised their project could “bring significant new users and liquidity to Aave.”
Many aspects of World Liberty remain unknown, particularly how it will operate and where it will be available. At the end of September, the project opened a whitelist allowing specific Americans—accredited investors only—to purchase WLFI tokens. Under U.S. Securities and Exchange Commission (SEC) rules, these tokens can only be offered to particularly wealthy or knowledgeable investors to mitigate risk.
Questions still remain about the proposed Aave instance for World Liberty—even if the proposal is approved and eventually launched. Previously, the World Liberty team stated they planned to allow all Americans to use the platform “in the future.”
However, the team confirmed to Decrypt that the proposed Aave instance for World Liberty would be open to all Aave users—meaning Americans would indeed be able to access it.
But this plan is not without risks. Other U.S.-focused DeFi protocols, such as Uniswap, have recently received notices from the SEC indicating plans to file lawsuits alleging the offering of unregistered securities.
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