The decentralized finance market faced turbulence this weekend as Aave’s token plunged over 6% following conflicting rumors about its relationship with World Liberty Financial, a DeFi project tied to President Donald Trump’s family. The decline came just as World Liberty Financial’s token, WLFI, debuted in perpetual futures trading with a valuation suggesting a staggering $40 billion market cap.
Rumors Lead to Aave Selloff
The decline in Aave was due to speculation surrounding a governance proposal, which dated back to October 2024. The proposal stated that Aave will have 7% of the circulating supply of WLFI, and 20% of revenues will be shared when WLFI is deployed on Aave v3.
There were rumors on social media that this arrangement had been agreed upon. A community post on X revived the old proposal, claiming the allocation was already agreed upon. The rumor quickly spread after Aave founder Stani Kulechov cryptically replied “yes” in the comments and described the speculation as “the art of the agreement”.
WLFI Team Issues Denial
The WLFI team later issued a firm denial. They said the claim that Aave would receive 7% of WLFI’s supply was “false and unfounded”. The clarification directly contradicted online chatter and created confusion about whether the original proposal was ever formally enacted.
Traders had already assigned a potential $2.7 billion value to Aave’s supposed WLFI stake, nearly half of Aave’s own fully diluted valuation. Despite the denial, the buzz drove sharp volatility in Aave’s token price, which first spiked by more than 7% before tumbling. The token swung from a high near $385 down to $339. It currently trades at $329.
World Liberty Financial Gains Traction
While Aave dealt with the rumors, attention turned to World Liberty Financial itself. The project announced it would unlock tokens for early investors on September 1. These tokens were sold at $0.015 and $0.05 in earlier funding rounds. Investors will be able to redeem 20% of their holdings through an on-chain compliance system called the Lockbox.
The perpetual futures debut on Binance, Bybit, and OKX, valuing WLFI at around $0.42. This price implied a fully diluted valuation of more than $40 billion, based on the token’s total 100 billion supply.
Trump-Linked WLFI Tests Politics and Regulation
The project’s ties to President Trump have stirred political debate. Some Democrats argue his involvement presents conflicts of interest, particularly after he signed the GENIUS Act in July. The legislation created the first comprehensive stablecoin regulatory framework in the United States. Opponents say provisions intended to limit conflicts were weakened during negotiations.
Even with the criticism, WLFI’s launch is seen as a major test for the intersection of politics and crypto innovation. The unlocking of the tokens will be the first time early investors will be allowed to trade their holdings. In addition, it is likely to define how politically-linked blockchain projects will perform under the U.S. regulatory framework.
Aave Expands as Governance Rumors Rock Market
These developments happen amidst a revived momentum in decentralized finance. The total value locked in protocols is now more than $167 billion. It is gradually moving near the December 2021 record level of nearly $212 billion.
Aave is also expanding, most recently launching on Aptos as a part of its multi-chain expansion strategy. Nevertheless, the rumors about WLFI indicate how governance and political affiliations can quickly influence the sentiment in the market.
Trump’s WLFI Mints $205M Stablecoins
Earlier, World Liberty Financial minted $205 million of its USD1 stablecoin following a speech by Federal Reserve Governor Christopher Waller. Waller praised stablecoins as strengthening the dollar’s global role. The mint lifted the USD1 circulating supply to $2.4 billion.
This marks the largest increase since April, signaling growing confidence in the project’s stablecoin strategy. USD1 has become the world’s sixth-largest stablecoin by market capitalization, trailing Tether and USDC.
Waller called stablecoins a tool to improve retail and cross-border payments. SEC Chair Paul Atkins echoed support, describing the GENIUS Act as a landmark for U.S. crypto regulation. The project’s treasury had grown to $548 million, its largest value ever, with stablecoins now being its largest asset.
