Despite high hopes, even the Trump family’s endorsement couldn’t push decentralized finance (DeFi) into the mainstream.
World Liberty’s Weak Token Sale
Earlier this week, World Liberty Financial, a DeFi project backed by Donald Trump and his sons, launched its much-anticipated token sale. However, the public sale only attracted a small fraction of its target, disappointing those who expected a strong performance.
Investor Hesitations
One potential reason for the lukewarm response could be the project’s structure, which heavily benefits the Trump family. According to the project’s “gold paper,” Donald Trump and his associates will receive 22.5 billion tokens, valued at $337.5 million. Additionally, they have the right to claim 75% of the protocol’s net revenues, a setup that may have deterred investors.
Barriers for Participation
Although the initial sale was weak, some argue this may not accurately reflect the demand for World Liberty and DeFi in general. The token sale was open only to accredited investors, limiting participation and possibly reducing the project’s reach.
DeFi’s Current Struggles
Beyond this project, the overall DeFi sector is still far from its peak. Unlike Bitcoin and Ethereum, which have seen price surges, DeFi projects haven’t regained the momentum they once had. Higher interest rates in traditional markets are part of the challenge. Sandy Peng, co-founder of blockchain solution Scroll and advisor to World Liberty, noted that the dynamics have shifted since the 2020 DeFi boom.
DeFi’s Past and Present
During the summer of 2020, interest rates were close to zero, and on-chain DeFi yields were extremely attractive. This drew billions of dollars into the space. However, today’s higher rates in traditional markets are drawing capital away from DeFi.
Fading Vision for DeFi
The vision of a decentralized financial system, operating entirely on blockchain without intermediaries, seems harder to achieve. High interest rates are one challenge, but they are not the only factor causing DeFi’s slowdown.
Conclusion
The struggles of the Trump-backed World Liberty project highlight the broader difficulties DeFi faces today. Both the project’s structure and current market conditions show that the path to mainstream success for DeFi remains uncertain.
