World Liberty Financial Launches WLFI Token Buyback and Burn Program

The Trump family-backed decentralized finance (DeFi) project, World Liberty Financial, will initiate a token buyback and burn program next week, after WLFI tokens experienced a drop of 41% in their value during September.

Details of the Token Buyback and Burn Initiative

On Friday, World Liberty announced that the team plans to execute the token buyback and burn mechanism next week. The project promised transparency regarding the initiative, vowing to share updates on each buyback and burn conducted.

Mechanisms like token buybacks and burning are typically utilized to alleviate selling pressure when prices decline. Buybacks occur when companies repurchase their tokens, while burning involves sending the tokens to an address that makes them unusable. Together, both actions effectively decrease the number of tokens circulating within the market.

The decision to implement a buyback and burn strategy for WLFI tokens comes in response to a significant drop in value last month. As per CoinGecko, WLFI was trading at $0.19 on Friday, representing a 41% decrease from its all-time high of $0.33 on September 1.

The proposal for the token buyback and burning mechanism was approved by the community, passing with 99% support from holders. This strategy involves the WLFI team collecting fees generated from its liquidity positions on Ethereum, BNB Chain, and Solana, using the funds to purchase WLFI on the open market, which will then be sent to a burn address to be permanently removed from circulation.

The WLFI team noted in their proposal that this mechanism would lead to a direct reduction in supply, stating that each trade will result in WLFI being taken out of circulation. This is expected to help stabilize the price by making the asset scarcer.

Additionally, the team highlighted that the move is in line with their platform’s growth, as increased fees will generate more WLFI to be burned.

However, they clarified that only fees from liquidity controlled by WLFI are considered in the burning mechanism. Community or third-party liquidity pools will not be impacted.

Some have speculated that the burning mechanism could result in the elimination of approximately 4 million WLFI tokens daily, potentially reducing total supply by nearly 2% over a year. Nevertheless, the proposal does not specify how many tokens the team intends to buy back and burn starting next week.