Decentralized finance markets faced turbulence as Aave’s token plunged more than 6% this weekend amid conflicting rumors about its relationship with World Liberty Financial, a DeFi project linked to President Donald Trump’s family. The decline comes shortly after World Liberty Financial’s token, WLFI, debuted in perpetual futures trading at a valuation that suggests a whopping market capitalization of $40 billion.
Rumors leading to sale of Aave
Aave’s decline is due to speculation surrounding a governance proposal dating back to October 2024. The proposal states that Aave will hold 7% of the circulating supply of WLFI and that 20% of the revenue will be shared once WLFI is deployed on Aave v3.
Rumors spread on social media that this arrangement had been agreed upon. X’s community post revived the previous suggestion, claiming that the allocation had already been agreed upon. The rumor spread quickly after Aave founder Stani Kulechov cryptically replied “yes” to the comment and described the speculation as “the art of consensus.”
WLFI team rejects issue
The WLFI team later issued a firm denial. They said claims that Aave would receive 7% of WLFI’s supply were “false and unfounded.” This explanation directly contradicted online chatter and caused confusion about whether the original proposal was officially enacted.
Traders have already assigned a potential $2.7 billion valuation to Aave’s expected WLFI stake, nearly half the fully diluted value of Aave itself. Despite this denial, the rumor caused rapid volatility in the price of Aave’s token, initially surging by more than 7% before plummeting. The token fell to $339 from a high near $385. It is currently trading at $329.
Financial benefit traction of global freedom
While Aave processed the rumors, attention turned to World Liberty Financial itself. The project announced that it will unlock tokens for early investors on September 1st. These tokens were sold for $0.015 and $0.05 in the initial funding round. Investors can redeem 20% of their holdings through an on-chain compliance system called Lockbox.
Perpetual futures debut on Binance, Bybit, and OKX, valuing WLFI at around $0.42. This price implies a fully diluted value of over $40 billion based on a total supply of 100 billion tokens.
Trump-linked WLFI tests politics and regulation
President Trump’s relationship with the project has sparked political controversy. Some Democratic lawmakers argue that his involvement creates a conflict of interest, especially after he signed the GENIUS Act into law last July. The bill creates the first comprehensive stablecoin regulatory framework in the United States. Opponents say provisions meant to limit conflict were weakened during negotiations.
Despite the criticism, the launch of WLFI is seen as a major test of the intersection of politics and cryptocurrency innovation. Unlocking the token will mark the first time that early investors will be able to trade their holdings. It will also likely define how politically connected blockchain projects will perform under the U.S. regulatory framework.
Aave Expands into Governance Rumor Rock Market
These developments come amid a resurgence of momentum in decentralized finance. The total value locked in the protocol is now over $167 billion. This is inching closer to the record level of nearly $212 billion in December 2021.
Aave is also expanding, most recently launching on Aptos as part of its multi-chain expansion strategy. Nonetheless, the rumors surrounding WLFI indicate how governance and political affiliations can quickly influence market sentiment.
Trump’s WLFI issues $205 million stablecoin
Previously, World Liberty Financial issued $205 million in USD1 stablecoins following a speech by Federal Reserve Bank President Christopher Waller. Waller praised stablecoins for strengthening the dollar’s global role. The Mint increased its circulating supply of USD1 to $2.4 billion.
This is the largest increase since April, indicating growing confidence in the project’s stablecoin strategy. USD1 has become the world’s sixth-largest stablecoin by market capitalization, following Tether and USDC.
Waller called stablecoins a tool to improve retail and cross-border payments. SEC Chairman Paul Atkins expressed support for the GENIUS Act, describing it as a landmark for U.S. cryptocurrency regulation. The project’s funding has grown to its highest ever valuation of $548 million, making the stablecoin now its largest asset.