The Aave (AAVE) token’s price dropped by over 8% on Saturday due to speculation that the decentralized finance (DeFi) protocol would receive a different token distribution from World Liberty Financial (WLFI), a DeFi platform associated with members of US president Donald Trump’s family.
“The WLFI team informed WuBlockchain that the assertion that ‘Aave will receive 7% of the total WLFI token supply’ is inaccurate and constitutes false information,” blockchain journalist Colin Wu stated, igniting discussions regarding the rumor and token distribution on social media.
Wu referenced a WLFI community proposal from October 2024, which outlined an agreement where the Aave decentralized autonomous organization (DAO), responsible for governance of the protocol, would receive 7% of the circulating supply of the WLFI governance token and 20% of the revenues generated by the WLFI deployment on Aave v3.
Aave founder Stani Kulechov referred to the proposal as “the art of the deal” on Saturday, and, in another post, indicated that the proposal’s terms remained valid. Following the rumors, Aave’s token price fell from approximately $385 to a low of $339 before recovering to around $352.
Cointelegraph reached out to representatives of World Liberty Financial and Aave but had not received a response by the time of publication.
Speculation surrounding the arrangement between Aave and World Liberty coincides with a resurgence of interest in DeFi and increasing institutional participation in the cryptocurrency sector.
Related: $70B DeFi protocol Aave goes live on Aptos in ecosystem expansion
The DeFi sector is gaining traction as institutions take notice
Currently, the total value locked (TVL) in DeFi protocols exceeds $167 billion, according to DeFiLlama, approaching its all-time high of over $212 billion from December 2021.
The DeFi TVL surged significantly following the results of the 2024 US elections, driven by expectations of a more favorable regulatory environment for cryptocurrencies in the country.
Institutional investors such as banks, asset managers, corporations, and financial service companies are increasingly engaging with crypto and DeFi, shaping many of the narratives in the current market cycle.
This involvement has sparked discussions within the crypto community regarding the encroachment of government regulations on permissionless protocols and the potential capture of DeFi by traditional financial institutions.
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