The price of Aave (AAVE) tokens plummeted over 8% on Saturday, following rumors that the decentralized finance (DeFi) protocol would receive a different token allocation from World Liberty Financial (WLFI), a DeFi platform supported by members of U.S. President Donald Trump's family.
"WLFI team told WuBlockchain that the claim 'Aave will receive 7% of the total supply of WLFI tokens' is fake news," blockchain journalist Colin Wu stated, sparking discussions on social media regarding the rumor and token arrangement.
Wu referenced a WLFI community proposal from October 2024, which outlined an arrangement where the Aave decentralized autonomous organization (DAO), responsible for governing the protocol, would receive 7% of the circulating supply of WLFI governance tokens, as well as 20% of the protocol revenue generated from WLFI's deployment on Aave v3.
Aave founder Stani Kulechov referred to the proposal on Saturday as "the art of the deal," and stated in another post that the terms of the proposal remain valid. Following the rumors, the Aave token dropped from around $385 to a low of $339, before rebounding to approximately $352.
Cointelegraph reached out to representatives from World Liberty Financial and Aave, but did not receive a response by the time of publication.
As rumors about the arrangement between Aave and World Liberty emerged, DeFi has regained attention, with institutional participation in the cryptocurrency space on the rise.
According to DefiLlama data, the total value locked (TVL) in DeFi protocols currently exceeds $167 billion, approaching the historical high of over $212 billion reached in December 2021.
After the results of the 2024 U.S. presidential election were announced, DeFi TVL surged sharply, with market expectations for a more crypto-friendly regulatory environment in the country.
Institutional investors, including banks, asset management firms, corporations, and financial services companies, are increasingly participating in cryptocurrency and DeFi, shaping many narratives of the current market cycle.
This participation has sparked debates within the cryptocurrency community about the erosion of permissionless protocols due to government regulation and the potential for traditional financial institutions to control DeFi.
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Original article: “Aave tumbles over 8% on rumors of token deal with World Liberty Financial”
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