$WLFI: The Fourfold Narrative That Emerged from the White House to On-Chain in One Year

Introduction: A Year from White Paper to Controversy Center

World Liberty Financial (WLFI) officially announced its establishment on August 26, 2024, when the Trump family publicly unveiled the project through social media and official statements for the first time. Just a few weeks later, the project released its white paper on September 16 and launched its token presale in October.

Since then, WLFI has entered the market spotlight at an astonishing pace: it launched the USD1 stablecoin in the first half of 2025, subsequently bound to the listed company ALT5 Sigma, and officially launched the governance token $WLFI on September 1. In just one year, it has transformed from a new project dominated by a political family into a "phenomenal sample" that cannot be ignored by global media, investors, regulators, and the community.

The story of WLFI is not just a rollercoaster of a new coin's price; it simultaneously carries four narratives: stablecoin experiment, wealth effect, political symbolism, and governance paradox. This report will comprehensively analyze the rise and concerns of WLFI from these four perspectives.

Main Line One: USD1 and Cross-Chain Settlement Layer --- From "Can Cross" to "Is Used"

1.1 The Original Intention of USD1

USD1 is the core stablecoin of WLFI, serving as the "settlement layer" of the ecosystem. Its biggest selling points are safety, transparency, and compliance:

• Custody: Managed by BitGo.
• Audit: Monthly audit reports by Crowe LLP.
• Reserve Composition: As of the end of June 2025, the reserve size is $2.207 billion, with 85% in government money market funds and 15% in cash or equivalents, with over-collateralization.
• Goal: To avoid the common "death spiral" of algorithmic stablecoins while enhancing institutional investor confidence.

This combination is closer to the USDC/USDT model rather than the Terra UST-style algorithmic stablecoin.

1.2 Cross-Chain Technology and Ecological Penetration

WLFI announced the integration of Chainlink CCIP (Cross-Chain Interoperability Protocol) on September 1, supporting secure transfers across mainstream public chains such as Ethereum, Solana, and BNB Chain. CCIP adopts the Cross-Chain Token Standard (CCT), providing technical assurance for the multi-chain circulation of USD1.

Reports from CMC and several media outlets confirm that USD1 has landed on Solana and is collaborating with liquidity protocols such as Raydium and Kamino. This cross-chain layout means USD1 has the potential to become a universal settlement currency in multi-chain DeFi.

1.3 Actual Applications: From Narrative to Usage

However, what truly determines the value of USD1 is not "can cross," but "is used." Current applications include:

• Lending: Dolomite on Ethereum integrates USD1 as a core collateral.
• LP and Liquidity: Lista DAO and Pancake on the BNB chain establish USD1 liquidity pools.
• Staking and Cross-Chain: StakeStone provides staking yields and cross-chain liquidity.
• RWA Collaboration: Collaborating with projects like Ondo and Plume to embed USD1 into on-chain dollar bond funds and RWA public chains.

The key for the future is whether the real transactions and lending volume priced in USD1 can continue to grow. If it remains at the level of "political narrative" and "technical demonstration" without forming high-frequency settlement liquidity, its fundamental value remains questionable.

1.4 Research Insights

For researchers, the value of USD1 can be measured by a new metric:
Stable Utilization Ratio (SUR) = Actual settlement amount of USD1 in the DeFi ecosystem ÷ Reserve size.
If SUR can gradually increase from the current single digits to >50%, then the status of USD1 can be considered truly solid.

Main Line Two: Token Economics and the "Cognitive Dislocation" of Initial Circulation

2.1 TGE Launch and Price Performance

• Date: September 1, 2025.
• Initial Price: Approximately $0.20.
• Peak: Approximately $0.32.
• First Day Drop: To $0.225.
• Fully Diluted Valuation (FDV): As high as $23.1 billion.
• Actual Circulation Volume: 24.67 billion tokens, accounting for 24.7% of total supply.

The market originally expected the initial circulation volume to be 3-5 billion tokens, but the actual circulation volume exceeded it by 8 times, directly putting pressure on the price.

2.2 Information Disclosure and Investor Misunderstanding

WLFI officials emphasize "fair launch":

• No pre-transfer of tokens.
• Founding team does not sell.
• Priority for retail investors.

However, there is an information gap regarding the "unlocking rhythm." Although some unlocked tokens (ecosystem/strategic reserves) are not circulating in the short term, the market still counts them as "potential sell pressure," creating pessimistic sentiment. This "cognitive dislocation" led to a 40% rapid correction after the launch.

2.3 Burn and Deflation Narrative

• September 2: The official initiated a governance proposal to use 100% of treasury liquidity fees for token buybacks and burns, creating a deflationary model.
• September 3: Executed the burn of 47 million WLFI, approximately 0.19% of the supply.
• On-Chain Actions: The multi-signature agreement completed the burn and repurchased about $2 million worth of tokens from the market.

Despite frequent actions, the market generally believes the effects are limited, criticizing it as "a drop in the bucket."

2.4 Whales and Wealth Effect

• Early Investors: Low-cost tokens (priced at $0.015-$0.10) saw profits of up to 20 times during the TGE phase.
• On-Chain Data: Some early addresses quickly transferred tokens to exchanges for cashing out.
• Trump Family: Holds approximately 20.6 billion WLFI, with a paper value of several billion dollars.

This wealth effect further intensified the community's skepticism that "the project serves the whales."

2.5 Research Insights

Token economics research should be divided into two curves:

1. Nominal Unlocking Curve: The total amount of unlocking announced by the official.
2. Actual Circulating Curve: The amount of tokens that can be utilized and potentially sold on-chain.

The gap between the two is often the key to market sentiment and price fluctuations.

Main Line Three: "Treasury + Listed Company" Binding and Political Symbolism

3.1 The Involvement of ALT5 Sigma

What makes WLFI special is its deep binding with the listed company ALT5 Sigma:

• ALT5 Sigma announced the purchase of 7.5 billion WLFI for $1.5 billion, at a price of about $0.20.
• Executives from ALT5 hold cross-positions with the WLFI team.
• Media refers to it as a "MicroStrategy-like model," integrating tokens into the financials of a listed company, forming a "treasury holding."

This arrangement not only provides formal financial backing but also brings additional compliance and scrutiny pressures.

3.2 The Flow Premium of Political Symbolism

• Trump Family Holdings: Eric Trump and others publicly support it, with the family's paper wealth in the billions.
• Media Endorsement: Media frequently reports on the "Trump family's crypto empire," directly boosting market attention.
• Risk Overlay: Political events (such as election cycles and regulatory hearings) may become triggers for price volatility.

This makes WLFI a narrative case intertwined with "politics, finance, and technology."

3.3 Board Changes and Compliance Signals

• September 10: Eric Trump was downgraded from a director of ALT5 Sigma to an "observer."
• Impact: On the day the news was released, WLFI fell 7% to $0.1963.
• Speculated Reason: Related to compliance communications with Nasdaq.

This indicates that while political and listed company narratives can attract attention, they may also quickly backfire due to compliance issues.

3.4 Research Insights

Investors should incorporate the "Political/Public Opinion Calendar" into their risk models:

• Campaign milestones.
• Regulatory hearings.
• Board personnel changes.

These events often trigger market volatility faster than technology or token economics.

Main Line Four: Decentralization vs. Gatekeeping Governance

4.1 Blacklist Incident

• September 4-5: WLFI blacklisted Justin Sun's address (holding approximately $107 million WLFI).
• Reason: The project team claimed it was for "risk mitigation" to prevent malicious activities.
• Consequence: Triggered community concerns about "centralized authority," causing prices to plummet by over 10%.
• Sun's Response: Claimed the freeze was unreasonable and offered a 20% APY deposit through HTX, further exacerbating market doubts.

4.2 The Essence of Governance Model

Although WLFI claims to be a governance token:

• Proposals require company pre-review.
• The company has final veto power.
• Governance is closer to "gatekeeping" rather than fully decentralized.

This model has advantages in compliance (able to respond quickly to blacklist incidents) but deviates from the decentralized spirit of DeFi.

4.3 Community Opinion and Media Criticism

• Reuters, CoinDesk, and other media repeatedly emphasize issues of "governance centralization" and "political family profits."
• The community refers to it as a "digital oligarch model," questioning whether it is merely a well-packaged centralized finance.

4.4 Research Insights

Future research should focus on "transparency of governance authority":

• Is the blacklist mechanism publicly transparent?
• Is there an appeal/unblocking mechanism?
• Are the reasons for vetoing governance proposals made public?

If these issues remain unresolved for a long time, the governance model will become WLFI's biggest structural risk.

Key Events in September and Market Reactions

• 9/1: Token launched, price surged then quickly fell.
• 9/2-3: Burned 47 million tokens and proposed deflationary governance.
• 9/4-5: Justin Sun's address was frozen, escalating controversy.
• 9/6: Price rebounded to $0.2152.
• 9/8: Price plummeted over 10% due to manipulation controversy and HTX incident.
• 9/10: Eric Trump downgraded to observer, price fell to $0.1963.

Overall, WLFI's price fluctuations are driven more by public opinion and governance events rather than pure supply and demand.

Investor/Researcher Checklist (Quantitative Monitoring)

Supply-Side Actions

• Scale and frequency of burns/buybacks.
• Price changes 24h and 72h after actions.

Governance/Authority Events

• Blacklist freeze/unfreeze timestamps.
• Correlation between public sentiment and price.

Cross-Chain and Settlement Utilization Rate (SUR)

• Settlement amount of USD1 in lending/LP.
• Active addresses and retention across chains.

Compliance/Personnel Changes

• ALT5/Nasdaq communication milestones.
• Board personnel adjustments.

Market Structure

• Trading behavior of the top ten holders.
• Price linkage with high-yield products on exchanges (e.g., HTX 20% APY).

Conclusion: Future Narratives and Risk Hedging

WLFI is an unprecedented case: it is both an experiment in stablecoins and cross-chain technology, as well as a symbol of political family capitalization. Its technical milestones (CCIP cross-chain, USD1 reserves), token economic actions (burns and deflation proposals), and governance events (blacklists, board changes) collectively shape a project characterized by "high volatility, high controversy, and high traffic."

In the coming months, the trajectory of WLFI will depend on:

1. Whether the real utilization rate (SUR) of USD1 can steadily grow.
2. Whether governance events become more transparent, reducing doubts about "centralized control."
3. How political and compliance risks are digested by the market.

WLFI may be a "political experiment" in the crypto market, providing not only a speculative target but also an excellent case for investors to examine how narratives, systems, and market forces intertwine.

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