A decentralized finance (DeFi) initiative supported by the Trump family, World Liberty Financial, is set to introduce a token buyback and burn program this week, following a 41% drop in the value of WLFI tokens in September.
On Friday, World Liberty shared that its team will roll out the buyback and burn mechanism this week. The project plans to publicly announce the initiative, committing to provide updates on each buyback and burn as they occur.
Token buybacks and burning strategies are typically used to counteract selling pressure during price declines. Buybacks involve companies reacquiring their tokens, while burning refers to sending tokens to an irretrievable address. Together, these methods reduce the total circulating supply in the market.
This buyback and burn approach for WLFI tokens comes after a significant decline in value throughout September. CoinGecko reports that WLFI traded at $0.19 on Friday, marking a 41% drop from its peak of $0.33 on Sept. 1.
WLFI buyback and burn follows governance vote
The decision to implement a token buyback and burn mechanism for treasury liquidity fees resulted from a community vote that garnered 99% approval from holders.
This initiative allows the WLFI team to gather fees generated from its liquidity positions on Ethereum, BNB Chain, and Solana, using those funds to buy WLFI on the open market. The purchased tokens will be redirected to a burn address, permanently withdrawing them from circulation.
The WLFI team indicated in the proposal that this mechanism will directly diminish supply, asserting that every trade will effectively remove WLFI from circulation. This suggests the implementation will assist in stabilizing the price as scarcity increases.
The team further noted that this initiative aligns with platform growth, as additional fees will result in more WLFI being burned.
However, the team clarified that only fees from liquidity controlled by WLFI will be included in the burning process, with community or third-party liquidity pools remaining unaffected.
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Unclear on how many tokens will be burned
Some speculated that the burning mechanism could eliminate approximately 4 million WLFI tokens daily, potentially removing nearly 2% of total supply over a year. Nonetheless, the proposal does not clarify how many tokens the team intends to buy back and burn.
Cointelegraph reached out to World Liberty Financial for further details but had not received a response at the time of publication.
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