World Liberty Financial will launch a WLFI token buyback and burn after a 41% price drop in September, aiming to cut supply and stabilize value.
The Trump family-backed decentralized finance (DeFi) project World Liberty Financial will launch a token buyback and burn program this week after WLFI tokens lost 41% of their value in September.
On Friday, World Liberty announced that its team will implement the token buyback and burn mechanism this week. The project said the initiative would be publicly disclosed, promising to share updates on each buyback and burn once they are conducted.
Token buybacks and burning mechanisms are usually implemented to absorb selling pressure when prices drop. Buybacks are when companies repurchase their tokens, while burning sends the tokens to an unusable address. The mechanisms essentially lower the amount of tokens circulating in the market.
The implementation of a buyback and burn strategy for WLFI tokens follows a steep decline in value in September. According to CoinGecko, WLFI traded at $0.19 on Friday, about 41% lower than its all-time high of $0.33 on Sept. 1.
WLFI buyback and burn follows governance vote
The implementation of a token buyback and burning mechanism for its treasury liquidity fees follows a community vote, which passed with 99% approval from holders.
With this, the WLFI team will collect the fees generated from its liquidity positions on Ethereum, BNB Chain and Solana, and use the funds to purchase WLFI on the open market. These will then be sent to a burn address and permanently removed from circulation.
The WLFI team said in the proposal that the mechanism will directly reduce supply, adding that every trade will remove WLFI from circulation. This implies that the implementation will help stabilize the price as the asset becomes more scarce.
The team also said the move aligns with platform growth, as more fees will mean that more WLFI will be burned.
Still, the team also clarified that only fees from WLFI-controlled liquidity are included in the burning mechanism. The project said that community or third-party liquidity pools are not affected.
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Unclear on how many tokens will be burned
Some speculated that the burning mechanism would eliminate about 4 million WLFI tokens daily, disposing of almost 2% of the total supply in a year. Still, it’s unclear from the proposal how many tokens the team will buy back and burn.
Cointelegraph reached out to World Liberty Financial for more information, but had not received a response by publication.
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