Catenaa, Thursday, January 30, 2025 – The Frax Finance community is deliberating a proposal to invest $5 million in the native token of World Liberty Financial (WLFI), a decentralized finance (DeFi) project tied to U.S. President Donald Trump. The proposal, submitted by a Frax contributor, also suggests a potential follow-on investment of an additional $5 million, contingent on the success of the initial round.
The governance proposal aims to position Frax within the WLFI ecosystem, citing Trump’s administration’s pro-DeFi stance. “As Trump’s only DeFi project, WLFI is the ideal partner to cement Frax’s leadership in U.S.-based DeFi growth,” the proposal stated.
WLFI has been actively trading cryptocurrencies, acquiring $112.8 million worth of assets on Trump’s inauguration day, including Ether, Wrapped Bitcoin, and Aave.
Frax, which manages $445 million in total value locked across its decentralized stablecoin and Frax Ether, views the investment as a strategic move to expand its visibility and adoption.
Community reactions are divided. Some members argue that investing at WLFI’s $5 billion fully diluted valuation is risky due to its lack of a proven track record. Others express concerns about potential dilution affecting token value.
The proposal underscores Frax’s ambition to align with the U.S. government’s growing focus on cryptocurrency while navigating the risks of speculative investments.
