World Liberty Financial Proposes Token Burn After WLFI Price Decline

• WLFI proposes burning all protocol fees to reduce supply after 30% post-launch price drop.
• Top 100 wallets sold $49M WLFI while Smart Money and whales showed smaller accumulation.
• Derivatives data shows short squeeze potential near $0.28 with bullish divergence on RSI.

The Trump-backed decentralized finance project World Liberty Financial (WLFI) has announced a governance proposal to address market pressures after its token dropped 30% following its recent debut. The plan calls for the use of all protocol fees collected across Ethereum, BNB Chain, and Solana liquidity pools to repurchase WLFI tokens from the market. Tokens acquired under this program would then be permanently removed from circulation.

If implemented, the buyback and burn strategy would directly tie network activity to token scarcity. Supporters argue that reducing the circulating supply could increase the proportion of holdings for long-term participants. Early responses to the proposal have been largely favorable in community discussions. However, the measure leaves some questions about treasury flexibility in emergency scenarios since 100% of fees would be allocated to burning.

 WLFI Price Action and Token Movements

According to our previous report, since launch, WLFI’s market performance has faced steady selling pressure. The token fell from a peak of $0.331 to as low as $0.210 before recovering to $0.229. On-chain data shows that the top 100 addresses sold approximately 216.54 million WLFI, valued at $49.15 million, at an average price near $0.227.

Source: Coingecko

Other activity has been more mixed. Smart Money wallets accumulated around 102.78 million WLFI, estimated at $23.33 million, during the same period. In contrast, public figures and key opinion leaders were responsible for dumping close to $546.40 million worth of tokens, adding further downward pressure. Meanwhile, whales with holdings between one million and ten million tokens accumulated 26.85 million WLFI worth roughly $6.10 million, though this was smaller compared to broader outflows.

A major factor in market supply came from a large token unlock, which released 24.6 billion WLFI into circulation. The event increased the circulating supply to 27.3 billion out of a total 100 billion tokens and pushed the project’s market capitalization to $6.6 billion. The Trump family’s holdings now total approximately $5 billion in WLFI.

Derivatives Market and Technical Signals

While the spot market has shown weakness, derivatives trading shows a different view. WLFI’s perpetual contracts launched on August 23, preceding spot listings. Short positioning dominates across exchanges, with Binance reporting nearly twice as many short liquidations as longs. On Bitget, shorts recorded liquidations of $23 million against $16.6 million in long positions.

Hyperliquid’s seven-day liquidation heatmap points to patterns around $0.28. A move above this threshold could trigger a short squeeze, forcing sellers to cover positions and potentially accelerating a rally toward $0.32.

Technical readings add further signals. Between August 24 and September 1, WLFI’s price chart formed higher lows while its Relative Strength Index (RSI) produced lower lows, creating a bullish divergence. On Bybit’s spot chart, WLFI trades below the Volume-Weighted Average Price (VWAP) near $0.23. A breakout above VWAP could align spot momentum with the derivatives market, improving short-term prospects.