Trump family-backed World Liberty Financial on Tuesday proposed unlocking 62.3 billion WLFI governance tokens, less than a week after CoinDesk reported that the company had borrowed $75 million in stablecoins using 5 billion of its own tokens as collateral on lending platform Dolomite.
WLFI’s tokens were initially sold as governance-only tokens, without transferability and locked indefinitely. A vesting schedule with a clear liquidity path changes the economics of the asset purchased by the holder.
The proposal would open up liquidity to insiders who were previously unable to exit, thereby changing the economics of the token.
The proposal divides the locked supply into two groups. Early backers holding 17 billion WLFI will receive a 2-year cliff, followed by a 2-year linear vest, retaining all tokens.
Founders, team members, advisors and partners holding 45.2 billion WLFI will face a 2-year cliff and 3-year vesting, but 10% of their allocation (approximately 4.5 billion tokens) will be destroyed immediately upon passage. (Burning refers to the permanent removal of a token from the supply, usually by sending to an address that no one controls.)
In practical terms, this means insiders will hand over 4.5 billion tokens in exchange for 40.7 billion tokens locked indefinitely without a vesting schedule before starting to unlock them. Prior to this proposal, these tokens had no access to liquidity.
WLFI’s post on Wednesday included participation data from six previous votes, showing that even the proposal with the highest participation – the vote to make the token tradable – attracted 11.1 billion WLFI voting rights.
The proposal has a quorum of 1 billion and requires only a simple majority to pass. At these thresholds, the proposal can be passed with just a fraction of the founder and team allocations.
Holders who do not affirmatively accept the new vesting terms will lock their tokens indefinitely and retain governance voting rights.
The timing follows the events of the past week.
CoinDesk reported on April 9 that WLFI had deposited 5 billion of its own governance tokens into Dolomite, a lending protocol whose co-founders advise WLFI, and borrowed $75 million in stablecoins, some of which went to Coinbase Prime.
The next day, the WLFI token fell by 12%, hitting an all-time low. Subsequently, Tron founder Justin Sun, once the project’s biggest supporter, publicly accused the team of treating users as “personal ATMs,” prompting WLFI to threaten legal action.
On Tuesday, the token was trading at nearly $0.079, down about 48% from the $65.6 million average price WLFI’s own treasury had conducted in open market buybacks over the past six months.
The vote on Wednesday’s proposal will last for seven days.
