WLFI’s DeFi credentials under fire after Sui partnership

5 months ago 29

Sui, a layer-1 blockchain developed by San Francisco-based Mysten Labs, announced connected March 6 that it had partnered with World Liberty Financial (WLFI). As portion of the deal, Sui’s autochthonal token, SUI (SUI), volition beryllium included successful WLFI’s “Macro Strategy” strategical token reserve, and some entities volition research merchandise improvement opportunities together.

WLFI, a decentralized concern (DeFi) protocol, has drawn contention owed to its ties to the household of US President Donald Trump. While WLFI insists that nary of Trump’s household members clasp an serviceman oregon manager position, Eric Trump serves arsenic 1 of the committee managers.

Additionally, contempt selling itself arsenic a DeFi innovator, WLFI relies connected Aave v3 for lending and borrowing functions, starring to questions astir its originality and independence.

Sui’s inclusion successful WLFI’s reserve is not wholly unexpected, arsenic Eric Trump, the president’s son, has publically expressed enactment for and personally holds the cryptocurrency.

The web is coming disconnected a palmy 2024 campaign, with its marketplace capitalization surging implicit 153% successful the past quarter, according to Messari. DeFi enactment connected Sui has besides been connected the rise, with its mean decentralized speech (DEX) measurement skyrocketing 1,591% year-over-year. It presently ranks among the apical 20 cryptocurrencies and is simply a top-10 blockchain successful decentralized concern (DeFi) by full worth locked (TVL), lasting astatine $1.283 billion, according to DefiLlama.

The Sui assemblage and its improvement squad mostly celebrated the partnership. However, manufacture participants voiced concerns implicit WLFI’s legitimacy and concern model.

Industry raises concerns implicit WLFI successful absorption to Sui partnership

Criticism of WLFI has centered connected skepticism astir its worth proposition. Many assemblage members question whether it brings thing caller to DeFi oregon if it is simply repackaging existing Aave services nether a antithetic brand.

Mike Dudas, managing spouse astatine crypto task money 6MV and a self-identified WLFI investor, dismissed the task arsenic a “pay-to-play” scheme.

Andre Cronje, co-founder of Sonic Labs and a cardinal fig successful DeFi arsenic the creator of Yearn.finance, leveled adjacent harsher criticism. He highlighted precocious fees and questionable reinvestment strategies that extract worth from crypto firms alternatively than providing genuine utility.

“Alan,” main selling serviceman of Axia8 Ventures, echoed these concerns, stating:

“Projects crook the genu and commune to the gods successful hopes that by playing this game, their token might, conscionable might, beryllium included successful a reserve. All of the supra to bash what? To pump the token’s price.”

WLFI has not publically addressed these criticisms. Cointelegraph reached retired for remark but has not received a effect arsenic of publication.

Sui marketplace absorption and strategical implications

Following the concern announcement, SUI’s terms surged 12%, concisely approaching the $3 people earlier settling astatine astir $2.85, representing a 5.7% summation from pre-announcement levels.

Cryptocurrencies, Lending, Donald Trump, Aave, DEX, SUI

Zak Folkman, co-founder of WLFI, said successful the announcement that Sui was selected for its “American-born” innovation and scalability. Some investors presumption this arsenic a motion that WLFI’s adjacent determination volition beryllium to people different US-based crypto projects, particularly those with Eric Trump’s implicit endorsement.

In a December interview, Eric Trump revealed that helium holds SUI, further fueling speculation astir its favorability wrong WLFI’s ecosystem.

Folkman added:

“Given our plans to enactment foundational DeFi assets successful the coming months, collaborating with Sui was an evident decision.”

Sui’s object-centric information exemplary and parallel transaction execution marque it an appealing infrastructure for DeFi applications. Unlike accepted account-based models, Sui structures assets arsenic autarkic objects, enabling faster ownership transfers and instant updates without requiring afloat network-wide consensus. This plan enhances liquidity movement, collateral absorption and astute declaration ratio successful DeFi.

WLFI’s holdings and ETF speculation

Onchain information suggests WLFI holds astir $80 cardinal successful crypto assets, based connected wallets tracked by Arkham Intelligence. However, a important information of its holdings has been transferred to Coinbase Prime, making it hard to hint its afloat plus distribution.

On March 6, onchain expert EmberCN estimated that WLFI holds a full of $336 cardinal successful crypto, including Ether (ETH), Wrapped Bitcoin (WBTC), Tron (TRX), Chainlink (LINK), Aave (AAVE), Ethena (ENA), MOVE, Ondo (ONDO) and Sei (SEI). The expert besides noted that the steadfast precocious added $21.5 cardinal successful WBTC, ETH and MOVE up of the White House Crypto Summit connected March 7.

“Because these assets were transferred to Coinbase Prime by WLFI immoderate clip ago, determination is nary mode to cognize whether they person been sold,” EmberCN wrote successful a translated post, adding that WLFI claims they person not been liquidated.

If WLFI inactive holds these assets, the existent insubstantial nonaccomplishment stands astatine astir $88 million. The largest percent nonaccomplishment is successful ENA (-63%), portion the largest monetary nonaccomplishment is successful ETH (-$67.35 million, down 31%), EmberCN added.

Sui, meanwhile, has hinted astatine increasing its beingness successful Washington, DC. On Feb. 4, Mysten Labs co-founder Adeniyi Abiodun revealed the task was engaging successful “exciting conversations” that could grow its ecosystem. A period later, Abiodun suggested that SUI could beryllium considered for ETF inclusion. On March 6, a Delaware filing indicated that Canary Capital whitethorn beryllium exploring an ETF for SUI, though past fake ETF filings person made the manufacture wary of premature speculation.