Frax Finance‘s community is reviewing a proposal to allocate up to $15 million to World Liberty Financial (WLFI), a decentralized finance project associated with US President Donald Trump’s family.
According to the proposal, An initial $5 million would be allocated to acquire WLFI tokens and establish a partnership. A further $10 million is contingent on the success of this initial investment.
Proponents believe this move could position Frax Finance within WLFI’s ecosystem, leveraging Trump’s involvement and pro-crypto stance.
The proposal argues that WLFI could onboard millions of Americans to decentralized finance. By aligning with WLFI, Frax Finance aims to strengthen its foothold in the US crypto landscape.
WLFI has invested over $70 million in major DeFi projects such as Aave, Chainlink, Ethereum, Tron, and Ethena.
WLFI’s governance model allows token holders to influence critical decisions, and its partnerships with Chainlink and Ethena Labs are key advantages.
The connection between Frax co-founder Stephen Moore, a former Trump economic advisor, and WLFI is also cited as a strategic benefit.
According to the proposal:
“By partnering with WLFI, FRAX would solidify its status as a premier US-origin stablecoin while benefiting from WLFI’s ecosystem and governance opportunities.”
Community pushback
Despite these potential benefits, the proposal has faced pushback from community members. Critics express concerns about the financial risks and question whether Frax Finance can afford such a significant commitment.
One community member stated:
“Investing $5 million at a $5 billion fully diluted valuation in a project without a proven track record is extremely risky and unreasonable. Such a high FDV relative to the current market capitalization suggests significant potential for future dilution, which could negatively impact token value. This valuation level is reminiscent of the exuberant and unsustainable valuations seen during the 2021-2022 crypto bull market.”
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