- World Liberty Financial has proposed a governance overhaul requiring WLFI holders to stake tokens to vote.
- Stakers with over 10 million WLFI (worth ~$1 million) get exclusive rights to market make the project’s USD1 stablecoin and profit from arbitrage.
- The proposal follows a recent “coordinated attack” that briefly broke USD1’s peg, causing over $290 million in withdrawals.
The Trump-linked entity World Liberty Financial proposed a major governance revamp on February 25 that ties voting power and financial rewards to locking up its native token.
According to the proposal, governance participants must now stake WLFI tokens for a minimum of 180 days to vote. Consequently, this system aims to align power with long-term backers rather than speculators.
Most notably, those who stake over 10 million WLFI gain exclusive rights to market make the USD1 stablecoin. This allows them to profit from the small price differences that occur between USD1 and other stablecoins.
“WLFI subsidises the market makers to maintain one-to-one parity, effectively passing the arbitrage opportunity… to Node stakers,” the project stated. Stakers will also receive annual WLFI rewards of around 2% for participating in votes.
This move follows a turbulent period for the project after it said it DeFi/usd1-stablecoin-breaks-peg-as-world-liberty-financial-suffers-coordinated-attack/” rel=””>suffered a “coordinated attack.” The incident, which the project blamed on hacked accounts and paid influencers spreading FUD, briefly knocked USD1 off its $1 peg.
A Monday post from the official World Liberty Financial X account said attackers opened massive WLFI shorts to profit from the chaos. Although the peg quickly recovered, spooked investors have pulled over $290 million from USD1 since.
Meanwhile, World Liberty Financial‘s USD1 has grown to become the fifth-largest stablecoin with a supply over 4.7 billion. The new proposal aims to secure its governance and stablecoin operations by incentivizing deep, long-term commitment.
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