Hate him or love him, the world’s most controversial figure is launching into crypto.
Former President Donald Trump, who once called bitcoin a “scam against the dollar” and described himself as “not a fan of cryptocurrency” has changed his tune in recent months.
At the annual Bitcoin Conference in July, Trump was lauded for promising to ensure America becomes “the crypto capital of the planet and bitcoin superpower of the world.”
He also promised to “appoint an SEC chair who will build the future, not block the future.” That’s a direct shot at current SEC Chair Gary Gensler, who has fought crypto entrepreneurs for the entire Biden administration.
Last night, Trump went a step further.
At 8 p.m. Eastern time, the Republican nominee for president announced his new crypto venture — World Liberty Financial. It’s a new cryptocurrency platform that will be controlled by sons Donald Trump Jr. and Eric Trump.
In an announcement, Trump said: “We’re embracing the future with crypto and leaving the slow and outdated big banks behind.” You can see the video announcement for yourself here.
What Is World Liberty Financial?
Here’s everything you need to know after the big launch:
According to the whitepaper for World Liberty Financial, the project is a decentralized finance (DeFi) project that allows users to borrow and lend cryptocurrency on smart contracts. The token associated with the project, WLFI, will be used for governance (i.e., voting rights).
Think of how a bank takes deposits and then lends them to people who want to buy a house or a car. This is a similar concept, however, instead of having a bank in the middle, the borrow/lend function is a smart contract that acts like a programmable escrow account.
This is not a new concept in crypto. Readers of my crypto service had a chance to cash in on one of the first DeFi protocols, Uniswap (UNI), when the project airdropped 400 tokens to over 250,000 users in September 2020. When the price of UNI hit $45 six months later, that free airdrop was worth $18,000.
Since then, thousands of DeFi platforms have launched.
According to DeFillama.com, there are $81 billion of cryptocurrency locked in smart contracts on these platforms.
However, none of the previous DeFi platforms have the social reach of the Trumps.
An Unsavory Partnership
Of course, there are some red flags to consider.
First, this isn’t Trump’s first foray into crypto.
In December 2022, Trump launched digital trading card NFTs. Each NFT displayed Trump posed as a heroic figure, such as an astronaut, superhero or Nascar driver. They sold out in a matter of hours, raising nearly $4.5 million.
In March of this year, the Trump NFTs were pulled from sale until the end of the year.
In a statement, NFT exchange OpenSea said: “This collection, Trump Digital Trading Cards, is non-transferable until December 31, 2024. This means the collection is disabled for secondary market buying and selling until that date. Because this is enforced by the creator, we’re unable to override this.”
Second, the Trumps partnered with one of the most unsavory characters in crypto.
Bloomberg reports that Chase Herro, the dealmaker behind World Liberty Financial has previously sold weed, weight-loss colon cleanses, and a $149-a-month-get-rich-quick class.
They continued:
Yet Herro, a fast-talking 39-year-old who shows off his fancy cars and private-jet rides on social media, is an unknown in the crypto world. More than a dozen prominent digital-asset investors said in interviews they had never heard of him. The only crypto project with which he was publicly affiliated attracted only a few million dollars and suffered a devastating hack. A token he promoted on influencer Logan Paul’s podcast dropped 96% afterward. In one speech in 2018, he called himself “the dirtbag of the internet” and said that regulators should “kick s—heads like me out.”
So if you get behind the potential lockup of the token and the serial scammer, you still need to contend with the biggest red flag of all…
20% of the WLFI tokens will be reserved for company insiders, 17% for user rewards, and the remaining 63% will be distributed through a public sale.
Lastly, the tokens are only available to accredited investors. This means you must have a net worth of $1 million, excluding your private residence. So it won’t be widely available to the public just yet.
Consider this: Uniswap users received 60% of the total supply of tokens for free! That gave everyone who used the DeFi exchange an investment stake in its future. They weren’t just users, they became evangelists. And that’s why Uniswap continues to dominate the DeFi exchange space, reporting a 66% market share last year.
What I’ve learned from crypto is that the most successful projects focus on the users first.
While the Trump affiliation is sure to create buzz around the token launch, I think I’m going to sit this one out.
Until next time,
Ian King
Editor, Strategic Fortunes
