- A whitepaper draft of Trump’s DeFi system shows that the internal team could get up to 70% of the tokens in an initial allocation.
- The paper also reveals that the project might be a rehash of Dough Finance, a DeFi project that was hacked for $2 million in July, including having four team members from Dough join the new project.
Donald Trump is preparing to launch a new blockchain project for Americans to boost financial inclusion, stick it to the “rigged” legacy financial system, and preserve the US dollar’s dominance in stablecoins. However, even before its launch, it’s attracting as much controversy as the man behind it.
Most of the details about the project now rebranded to World Liberty Financial, have been vague. These include the fact that it will be partially built on Aave and Ethereum and that it will focus on decentralized lending and borrowing, much like Aave has been doing for eight years.
However, this week, one media outlet obtained the draft whitepaper for the project, and the details are controversial, to say the very least.
One of the most eye-catching aspects is the tokenomics. The whitepaper shows that the “founders, team, and service providers” will receive a staggering 70% of the governance token, known as WLFI. This number is ludicrously high for any crypto project, much less one whose selling line is financial liberation and economic empowerment.
For context, when Satoshi Nakamoto created Bitcoin, he only allocated 5% of the supply to himself. Granted, that was before crypto tokenomics were popular, or even important. However, looking at more recent projects, the allocation has ranged below 30%. The Ethereum Foundation got 17% of the tokens, Cardano’s Input Output teams (three separate companies btw) got 20% of the ADA, and Solana’s team and foundation got 12.5% each.
As such, 70% allocation is objectively obscenely high. But not according to the people developing Trump’s project whose curt response to the allocation concerns was: “LMAO. nice joke ser.”
Even more concerning is that of the 30% left that will be sold to the public, some of the proceeds will seep back to the founders.
Trump’s DeFi Project Might Not Be the Solution America Needs
It gets worse. The whitepaper also revealed a concerning connection between World Liberty Financial and Dough Finance, a project whose security vulnerability was exploited and millions lost.
On July 12, attackers conducted a flash loan attack on Dough, exploiting invalidated call data on one of its contracts. The attacker manipulated the data on the contract, getting away with over 600 ETH, worth just over $2 million (this analysis by CertiK breaks down the exploit splendidly).
According to the whitepaper, four of the same people who built Dough are behind what will be America’s first national government-backed DeFi platform. The other listed founders are all three of Trump’s sons—including the teenage son Barron—who are listed as visionaries, influencers, and financiers.
Additionally, the project’s codebase on GitHub is directly copied from Dough, the same project that was hacked barely two months ago. This codebase has since been deleted, and it’s not clear if any of it will be included in the final product.
The Trump DeFi project would be a landmark moment for crypto in the US and beyond, catapulting an industry limited to the sidelines into the highest echelons of the global financial system. On the flip side, if it doesn’t pan out and is hacked or breaks down, it would give all the ammunition that anti-crypto governments and lawmakers need to ban crypto.
It’s a high-stakes game, and a project whose codebase is copied directly or which allocates 70% of the tokens to Trump’s family and cronies is a bad bet for crypto overall.
