Trump WLFI proposal faces opposition! Burning 5% of token treasury to incentivize USD1 stablecoin sparks controversy

Trump Family Crypto Project WLFI Announces New Governance Vote, which will authorize the use of less than 5% of the unlocked WLFI token supply for treasury funds, through targeted incentives to accelerate the adoption of the USD1 stablecoin. However, this initiative faced strong opposition early on, with preliminary data showing 46.1% of voters against the measure. Since its launch six months ago, USD1’s market cap has grown to $3.2 billion.

Trump Family’s Stablecoin Ambitions: USD1’s Seventh Place Ranking and Challenges

The Trump family entered the stablecoin market through World Liberty Financial, launching USD1, a digital asset pegged 1:1 to the US dollar. Since its launch about six months ago, USD1’s market cap has grown to $3.2 billion, a considerable growth rate in the stablecoin space. According to DefiLlama data, it currently ranks seventh globally among stablecoins, behind PayPal’s PYUSD but ahead of Ripple’s RLUSD.

However, being seventh may not satisfy a globally influential brand like Trump. The stablecoin market is dominated by USDT (Tether) and USDC (Circle), with combined market cap exceeding $150 billion, accounting for about 90% of the market share. To break through this oligopoly, USD1 must offer differentiated value propositions or adopt aggressive market strategies.

The WLFI proposal believes that broader use of USD1 will expand WLFI network coverage, utility, and economic activity, encouraging more users, platforms, institutions, and supply chains to integrate with infrastructure managed by WLFI holders. The proposal states: “The widespread adoption of USD1 tokens creates more opportunities for value capture within the WLFI ecosystem, benefiting WLFI’s initiatives and the long-term utility of its tokens.”

This flywheel logic is theoretically sound: increased USD1 usage → enhanced WLFI ecosystem value → more partners join → further increase in USD1 usage. However, initiating this flywheel requires initial momentum, which is why WLFI proposes using treasury funds for subsidies. Projects related to Trump also argue that this expenditure is necessary to narrow the competitive gap between USD1 and rival stablecoins.

Injecting 5% of Token Treasury to Boost Revenue: Copying Binance’s 20% APY Strategy

WLFI’s subsidy strategy is not fanciful but learned from successful TradFi and crypto market cases. Binance recently announced a promotion where holding USD1 yields up to 20% annualized return, with a cap of $50,000 per user. This high-yield approach is highly attractive in the short term, quickly attracting users to switch from other stablecoins to USD1.

Trump’s World Liberty Financial plans to replicate this model, using its own funds to finance similar yield-generating collaborations. The mechanism is: WLFI allocates less than 5% of its unlocked token supply to fund incentives and partnerships for stablecoins. These tokens are not directly distributed to users but are used to subsidize high-yield products offered by partner platforms.

For example, if a DeFi platform offers USD1 deposit services with a normal market rate of 4-5%, WLFI can use treasury funds to subsidize an additional 15-16%, enabling the platform to offer 20% APY to attract users. This subsidy model is common in internet user acquisition strategies—Uber and Didi early on used cash burn subsidies to rapidly expand market share.

However, the sustainability of this strategy is questionable. While 5% of the treasury may seem small, if USD1 achieves large-scale adoption, subsidy costs could quickly deplete these funds. More importantly, once subsidies stop, will users continue to use USD1 or immediately switch to other higher-yield stablecoins? This “buy users with money” approach has proven to be very risky in TradFi.

Three Major Controversies in the WLFI Proposal

Token Dilution Concerns: Burning 5% of treasury tokens to subsidize users, WLFI holders worry about dilution and inability to benefit

Sustainability Doubts: After subsidies end, can USD1 retain users, or will it become a short-term arbitrage tool?

Governance Fairness: The proposal is led by a team dominated by the Trump family—does it truly represent community interests?

The project states that to ensure transparency, any partners rewarded under the new plan will have their identities disclosed. This transparency pledge is a response to external concerns about potential conflicts of interest involving the Trump family’s crypto projects, but whether it can be effectively implemented remains to be seen.

Community Split Behind 46.1% Oppose Vote

(Source: WLFI)

Although the Trump team believes this proposal benefits the ecosystem, the voting results show strong community opposition. Preliminary data indicates 53.4% of voters support the measure, while 46.1% oppose. Such a high opposition rate is rare in DAO governance and usually indicates fundamental flaws or poor communication.

Opponents’ reasoning may include: First, WLFI token holders see the use of treasury funds to subsidize USD1 users as diluting their rights. They bought tokens to participate in governance and share ecosystem benefits, but this proposal directs resources toward USD1 users rather than WLFI holders, creating a misalignment of interests.

Second, the community may question the effectiveness of the subsidy strategy. History shows many failed “money-burning” subsidies—users flock during the subsidy period but leave immediately once subsidies end. This “free-riding” behavior is even more common in crypto, where many users chase high yields without brand loyalty.

Third, the timing and manner of the proposal may raise procedural justice concerns. As a project led by the Trump family, does this proposal truly reflect the will of a decentralized community? Or is it merely a family business decision cloaked in DAO governance? Such doubts are especially prominent in Trump family crypto projects, which are often viewed more as commercial tools than truly decentralized protocols.

Despite current resistance, the proposal remains valid, with voting ending on January 4, 2026. Larger stakeholders may voice opinions before the deadline, and the outcome could still reverse. In DAO governance, large holders’ voting power often outweighs retail voters; if the Trump team or its close allies hold significant WLFI tokens, they might vote in favor at the last minute.

USD1’s Competitive Dilemma and Future of TradFi Integration

USD1 is currently ranked seventh among global stablecoins, reflecting rapid growth but also exposing competitive challenges. The top players include USDT (about $140 billion), USDC (about $50 billion), DAI, FDUSD, USDS, and PYUSD. To surpass these rivals, USD1 must find a unique value proposition.

Trump’s political influence is a double-edged sword. Supporters may choose USD1 for political reasons, but opponents may resist. In the global crypto market, such political labels could limit USD1’s international expansion. Moreover, the Trump family’s crypto projects have already sparked widespread conflicts of interest concerns, which could negatively impact TradFi institutions’ acceptance of USD1.

However, if the Trump administration truly promotes the US as a “crypto capital,” USD1 could benefit from policy incentives. For example, if government agencies start accepting USD1 for tax payments or other fees, it would provide official backing, greatly enhancing credibility. Such “government procurement” style promotion would be more effective than any token subsidies.