WLFI is building waves in the community after suggesting that it would use 100% of the Treasury liquidity costs to buy back tokens. This initiative, which involves burning tokens, creates a powerful deflation mechanism.
When implemented effectively, this strategy serves as a “weapon” to enhance the value of WLFIs while increasing confidence in a community-driven governance model.
Price boost mechanism
The World Liberty Financial (WLFI) community has announced important proposals. WLFI buys back WLFI in the open market using 100% of the fees generated from protocol-owned liquidity (POL). The repurchased tokens are then sent to the burn address, which permanently removes them from the circulation.
The proposal aims to directly reduce circulating supply, increase the relative benefits of long-term holders, and translate the use of the protocol into a deflationary driver under the principle that “the more you use the more you burn.”
WLFI has recently started trading. Data from Beincrypto Market shows that the maximum supply of Token is capped at 100 billion, with approximately 24.7 billion WLFIs currently in circulation. WLFI is trading at $0.24, down 26% from an all-time high just hours ago.
From a toconomic perspective, buyback and burn strategies funded by Pol fees create a positive feedback loop. Increased protocol usage increases Pol fees, greater buybacks, and cyclical supply steadily shrinks. If demand is stable or rises, this dynamic can generate long-term price support.
By limiting the mechanism to protocol-owned liquidity, WLFI also avoids harming third-party LPS and preventing conflicts of interest. Additionally, on-chain transparency in burn transactions provides a strong layer of accountability for community monitoring.
Of course, not everyone is very optimistic about the effectiveness of this proposal. Price and rating issues since the launch have lost faith in the project by some community members.
“You scam millions of people around the world and now live in American luxury with that money. This project marks the downfall of the Trump family, and no one in this market will trust your words again.” X-user directly blamed Donald Trump.
Terra Luna also has a repurchase system
There are potential risks. First, the size of Pol fees in the early stages may be relatively small. If trading volumes are low in pole pool, buybacks may not significantly affect WLFI distribution supply.
Second, allocating 100% of the fee to burn could put a burden on the Ministry of Finance’s operations and reserves. If the protocol fails to create alternative revenue streams, this can affect product development and reinvestment capabilities.
Furthermore, buyback operations can cause high volatility during periods of low liquidity, creating opportunities for forward and backward or short-term operations. Therefore, clear rules regarding implementation methods, reporting mechanisms, and fallback strategies are needed to ensure sustainable implementation.
Self-buyback strategies are ă…ś in the cryptocurrency market, as already shown by ChainLink (Link), Pump.Fun, and others.
However, not all projects that apply it are successful, and Terra Luna 2.0 is a classic example. The impact of the previous crash in 2022 and the low overall supply and burn rates make it difficult to recover Luna 2.0 prices.
Therefore, the WLFI community should add guardrails to its clear roadmap to become a financial governance, a transparent purchasing mechanism, and a sustainable measure. This program, when completed, can enhance tocononomics and demonstrate effective community governance.
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