Aave DAO is considering a proposal from World Liberty Financial. This proposal would provide the DAO with a portion of WLF’s revenue. Aave has $165 million in reserves.
Aave is already a DeFi juggernaut, with $165 million in its DAO treasury.
But the coffers of crypto lending protocols could grow even further thanks to Donald Trump’s polarizing crypto project, World Liberty Financial.
When World Liberty Financial announced that Marc Zeller, founder of the Aave Chan Initiative, a delegate platform on top of the Aave DAO, would be building on top of the Aave protocol, the Aave community was skeptical.
Things changed yesterday after the Trump Project made an offer to give Aave DAO, the cryptocurrency collective that operates the Aave protocol, 7% of WLFI tokens and 20% of future fees generated by WLF.
At WLF’s planned $1.8 billion valuation, the chunk of tokens given to Aave could be worth around $126 million.
“What we witnessed is that people welcomed their decision,” Zeller told DL News.
This move may have reassured many Aave DAO members about World Liberty Financial’s intentions.
Trump’s project to share revenue with Aave DAO and give it tokens aligns the two protocols while also ensuring that the politician’s foray into DeFi is not solely focused on making money for holders. It shows that there is no.
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Many in the DeFi community are concerned that World Liberty will become a way for the Trump family and the protocol creators to make money in DeFi.
Trump-related projects detailed the handouts in the Aave DAO Governance Forum’s “one-time check” proposal. In return, Aave DAO will help World Liberty Financial integrate the latest protocol version into Ethereum.
The temperature check, or proposal for a temperature check, is a preliminary proposal for DAO members to consider. Approved temporary check proposals will be put to a vote before being implemented.
What Aave is trying to gain
Rather than launching its own bespoke protocol, World Liberty is piggybacking on Aave, the largest DeFi lending protocol with a whopping $12 billion in deposits.
If the proposed integration is approved, users will be able to deposit USDC and USDT stablecoins alongside Ether and wrapped Bitcoin on the protocol.
These assets can be used as collateral to borrow other assets on Aave.
The transaction fees Aave receives from the Trump Project will add to the protocol’s approximately $67 million in annual revenue.
According to the proposal, Aave DAO will hold 7% of World Liberty’s native WLFI tokens for voting on governance decisions.
Previous code testing revealed that World Liberty Finance will supply 100 billion tokens.
Project stakeholders are expected to hold 70% of the tokens, with the remaining 30 billion to be sold at a planned valuation of $1.8 billion.
Osato Abang Nomayo is a DeFi correspondent based in Nigeria. He covers DeFi and technology. To share a tip or information about a story, contact us at osato@dlnews.com.
