WLFI Faces Backlash After 59% Vote from 9 ‘Team Wallets’ on USD1 Growth Proposal

World Liberty Financial is encountering significant criticism from its community after a governance vote endorsing a USD1 growth proposal received robust backing from a small group of substantial wallets.

Key Takeaways

WLFI approved a growth proposal for USD1, heavily supported by a small group of wallets.
The vote raised concerns over locked WLFI holders' exclusion from participation.
Critics argue the decision process indicates an imbalance of power among insiders.
Economic implications of the proposal challenged, particularly regarding tokenholder benefits.
World Liberty Financial is expanding its operations, including a potential banking charter application.

WLFI Faces Backlash After 59% Vote from 9 ‘Team Wallets’ on USD1 Growth Proposal

The vote prompted community objections centered around the exclusion of locked WLFI holders from participating, reigniting worries about the concentration of power, potential dilution, and the limitations of WLFI’s governance structure on-chain.

Image showing on-chain voting data

Analysis of on-chain voting revealed that the nine largest wallets in support of the proposal together controlled approximately 59% of the overall voting power.

The largest single wallet accounted for a significant 18.786% of the votes cast in the snapshot.

WLFI Vote Passes with 78%, but Participation Concerns Persist

Analysis by a pseudonymous trader and researcher, DeFi^2, indicated that several of these wallets are identified by on-chain tools as being associated with the team or strategic partners, which effectively allows this small group of insiders to influence the voting outcome.

The proposal approved by the community permitted World Liberty Financial to allocate less than 5% of its unlocked WLFI treasury assets to promote the adoption of USD1, the project’s stablecoin pegged to the dollar.

Created on December 28 and concluded on January 4, the vote involved 2,931 participants and garnered considerable support, passing with 3.3 billion votes, or 77.75%, in favor.

In contrast, the votes against the proposal totaled 944.3 million, while the number of abstentions was minimal. The quorum level reached 426%, far surpassing the required threshold for validity.

Image showing voting results

Criticism has primarily focused not on the proposal's content but rather on the voting accessibility issues.

Many WLFI holders are currently unable to access their tokens since the project's initial token generation event, which bars them from voting on governance issues until conditions for unlocking are modified.

Numerous community members highlighted that while these locked holders are unable to impact decisions, team and partner wallets enjoyed full voting access.

DeFi^2 referred to this situation as an “alarming governance vote,” asserting that a measure not connected to token unlocks was rushed through despite ongoing requests from holders to prioritize resolving access limitations.

Tokenholders opposing the proposal have also raised questions about its economic rationale.

According to the project’s documentation, WLFI holders are not entitled to protocol revenue, as 75% is allocated to the Trump family and 25% to the Witkoff family.

WLFI Holders Raise Concerns Over Incentives and Locked Assets

In this context, critics argue that utilizing WLFI tokens to drive USD1 growth merely amplifies dilution without offering direct benefits to tokenholders.

One tokenholder who voted against the proposal indicated that the project had previously utilized over nine figures of investor capital to gather assets such as Bitcoin, Ether, and Chainlink, yet WLFI holders did not receive any tangible advantages from these investments.

Tensions escalated further when on-chain data revealed a transfer of 500 million WLFI tokens to Jump Trading shortly after the vote concluded, while early investor allocations remain locked.

Community members have characterized the situation as imbalanced, with token emissions increasing and liquidity being available to select parties, leaving long-term holders waiting for their token unlocks.

Calls for the release of the remaining 80% of tokens allocated to early investors have become increasingly vocal across various social platforms.

This governance conflict is unfolding as World Liberty Financial pushes forward with a wider expansion strategy.

On January 8, the group announced that World Liberty Trust has submitted a de novo application for a U.S. national banking charter to the Office of the Comptroller of the Currency.

If granted, the charter would enable the trust to directly issue and safeguard USD1 within the U.S. banking system.

Shortly after, on January 12, World Liberty Financial introduced World Liberty Markets, a platform dedicated to lending and borrowing around USD1 and WLFI.