Why Trump-Linked Crypto Project World Liberty Financial Failed to Take Off

World Liberty Financial (WLF), a cryptocurrency project linked to former U.S. President Donald Trump, set out to make waves in the crypto world with lofty goals and promises of disruption. However, its token sale has fallen drastically short of expectations, raising just a fraction of its $300 million target. Here's why this ambitious project is floundering and what factors contributed to its struggle.

Unrealized Goals: A Dismal Token Sale

WLF aimed high, hoping to raise $300 million by selling 20% of its token supply at a $1.5 billion valuation. Instead, the project has managed to bring in only $13.5 million, a mere 5% of its goal.

The Trump Connection: Investor Doubts

One significant factor that caused hesitation among investors was the involvement of DT Marks DEFI LLC, a company connected to the Trump family. According to WLF's "gold paper," this entity is entitled to 75% of the project’s net protocol revenues and $337.5 million in WLFI tokens at the sale price. Jehan Chu, co-founder of Kenetic Capital, explained that this arrangement raised doubts about the project’s viability even among its most ardent supporters.

Skepticism Over Web3 Understanding

The project's association with Trump also led to concerns about its alignment with the ethos of Web3. Yat Siu, co-founder and executive chairman of Animoca Brands, commented that while Trump has publicly supported the crypto industry, his family has not yet shown they understand the community-centric nature of Web3. Instead, WLF’s approach has been perceived as more of a “cash grab” than a genuine effort to build a decentralized network.

Co-Founder Controversy: A Red Flag

Further contributing to WLF’s struggles are the backgrounds of two of its five co-founders, Chase Herro and Zak Folkman. Both have been involved in previous legal disputes and controversies that likely eroded investor trust. Their DeFi lending project, Dough Finance, was hacked earlier this year, resulting in a $2 million loss. Additionally, Herro and Folkman have been involved in multiple lawsuits across the U.S., adding to concerns about their credibility.

Restriction to U.S. Accredited Investors

The project’s decision to restrict its token sale to accredited U.S. investors excluded a large portion of the crypto community, particularly retail investors, who might have shown more interest if given the opportunity. This restriction, coupled with doubts about the founders' credibility, left the project with a limited pool of potential buyers.

Weak Tokenomics and Outdated Innovation

WLF’s technical foundation also failed to impress investors. The project’s plans to launch on Ethereum’s Aave v3 platform with liquidity offerings were seen as outdated by some in the crypto space. Joe McCann, founder and CIO of Asymmetric Financial, described WLF as “just another borrow/lending app,” a concept that was groundbreaking five years ago but is now seen as standard. Additionally, the one-year lock on token transfers further limited liquidity, a critical factor for investors.

Technical Issues and Setbacks

WLF’s launch was marred by technical problems, as the project's website crashed repeatedly during the token sale, further discouraging potential investors. The website's inability to handle traffic due to inadequate autoscaling added to the impression of a poorly executed project.

Conclusion: An Uphill Battle

While WLF’s public token sale figure of $13.5 million might not reflect the entire picture, as some buyers reportedly bypassed the website, it’s clear the project faces significant challenges. From controversial leadership to technical setbacks and restrictive tokenomics, World Liberty Financial has gotten off to a rocky start. Whether it can recover from this early stumble remains to be seen, but it will require a considerable turnaround to regain investor confidence.