The decentralized finance (DeFi) initiative World Liberty Financial, supported by the Trump family, is set to introduce a token buyback and burn program this week following a 41% decline in WLFI token value in September.
On Friday, World Liberty announced its intention to implement the token buyback and burn mechanism this week. The project committed to publicly disclose the initiative and provide updates on each buyback and burn as they occur.
Token buybacks and burning strategies are typically employed to mitigate selling pressures during price drops. Buybacks occur when companies repurchase their tokens, while burning involves sending tokens to an unusable address, effectively reducing the circulating supply.
The decision to execute a buyback and burn strategy for WLFI tokens comes after a significant devaluation in September. As reported by CoinGecko, WLFI traded at $0.19 on Friday, approximately 41% lower than its peak of $0.33 on September 1.
WLFI buyback and burn follows governance vote
The decision to implement a token buyback and burning mechanism for treasury liquidity fees followed a community vote that gained 99% support from holders.
This means the WLFI team will collect fees accrued from its liquidity positions on Ethereum, BNB Chain, and Solana, using those funds to acquire WLFI on the open market. The tokens will then be directed to a burn address, permanently removing them from circulation.
The WLFI team stated in the proposal that this mechanism will directly diminish supply, noting that every transaction will contribute to the reduction of WLFI in circulation. This is expected to help stabilize the price as the asset becomes scarcer.
Furthermore, the team mentioned that this approach aligns with the growth of the platform, as increased fees will lead to more WLFI being burned.
However, the team clarified that only fees generated from WLFI-controlled liquidity will be included in the burn mechanism, and that community or third-party liquidity pools will not be impacted.
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Unclear on how many tokens will be burned
Some speculated that the burning mechanism may eliminate around 4 million WLFI tokens daily, potentially removing nearly 2% of the total supply within a year. Nevertheless, specifics regarding the number of tokens the team plans to buy back and burn remain unclear from the proposal.
Cointelegraph reached out to World Liberty Financial for further details but had not received a response by publication time.
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