The decentralized finance project World Liberty Financial, supported by the Trump family, will launch a token buyback and burn plan this week, following a 41% drop in the value of WLFI tokens in September.
World Liberty announced on Friday that the team will implement a token buyback and burn mechanism this week. The project team stated that this initiative will be fully disclosed and promised to provide timely updates after each buyback and burn.
The token buyback and burn mechanism is typically used to absorb selling pressure when prices fall. A buyback involves the company repurchasing its tokens, while burning refers to sending tokens to a black hole address. These mechanisms are essentially aimed at reducing the number of tokens in circulation in the market.
Due to the significant drop in value in September, the WLFI team decided to implement the token buyback and burn strategy. According to CoinGecko data, WLFI was trading at $0.19 on Friday, down about 41% from its historical high of $0.33 on September 1.
The implementation of the buyback and burn mechanism for the protocol's treasury liquidity fees originated from a community vote, with the proposal receiving 99% support from holders.
The WLFI team will collect the fees generated from its liquidity positions on Ethereum, BNB Chain, and Solana, and use these funds to purchase WLFI on the open market. Subsequently, these tokens will be sent to a black hole address and permanently removed from circulation.
According to the WLFI team in the proposal, this mechanism will directly reduce supply and added that each transaction will cause WLFI to exit circulation. This means that the mechanism will help stabilize prices as the asset becomes scarcer.
The team stated that this move aligns with the platform's development direction, and as fees increase in the future, more WLFI will be burned.
At the same time, the project team indicated that only the fees generated from liquidity controlled by WLFI will be included in this burn mechanism, and liquidity pools provided by the community or third parties will not be included in this burn mechanism.
There are opinions suggesting that the burn mechanism will eliminate about 4 million WLFI tokens daily, accounting for approximately 2% of the total supply over a year. However, according to the proposal, it is currently unclear how many tokens the team will buy back and burn.
According to Cointelegraph, World Liberty Financial has been contacted for more information, but no response has been received as of the time of publication.
Related: Analyst: The cryptocurrency market in the fourth quarter will be driven by legislation, ETP approvals, and stablecoin growth.
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