WLFI’s DeFi credentials under fire after Sui partnership

Sui, a layer-1 blockchain developed by San Francisco-based Mysten Labs, introduced on March 6 that it had partnered with World Liberty Monetary (WLFI). As a part of the deal, Sui’s native token, SUI (SUI), shall be included in WLFI’s “Macro Technique” strategic token reserve, and each entities will discover product improvement alternatives collectively.

WLFI, a decentralized finance (DeFi) protocol, has drawn controversy attributable to its ties to the household of US President Donald Trump. Whereas WLFI insists that none of Trump’s members of the family maintain an officer or director place, Eric Trump serves as one of many board managers.

Moreover, regardless of advertising itself as a DeFi innovator, WLFI depends on Aave v3 for lending and borrowing capabilities, resulting in questions on its originality and independence.

Sui’s inclusion in WLFI’s reserve will not be solely sudden, as Eric Trump, the president’s son, has publicly expressed help for and personally holds the cryptocurrency.

The community is coming off a profitable 2024 marketing campaign, with its market capitalization surging over 153% within the final quarter, based on Messari. DeFi exercise on Sui has additionally been on the rise, with its common decentralized change (DEX) quantity skyrocketing 1,591% year-over-year. It at present ranks among the many high 20 cryptocurrencies and is a top-10 blockchain in decentralized finance (DeFi) by whole worth locked (TVL), standing at $1.283 billion, based on DefiLlama. 

The Sui neighborhood and its improvement workforce largely celebrated the partnership. Nonetheless, business individuals voiced considerations over WLFI’s legitimacy and enterprise mannequin.

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Trade raises considerations over WLFI in response to Sui partnership

Criticism of WLFI has centered on skepticism about its worth proposition. Many neighborhood members query whether or not it brings something new to DeFi or whether it is merely repackaging present Aave companies below a special model.

Mike Dudas, managing associate at crypto enterprise fund 6MV and a self-identified WLFI investor, dismissed the mission as a “pay-to-play” scheme.

Andre Cronje, co-founder of Sonic Labs and a key determine in DeFi because the creator of Yearn.finance, leveled even harsher criticism. He highlighted excessive charges and questionable reinvestment methods that extract worth from crypto corporations reasonably than offering real utility.

“Alan,” chief advertising officer of Axia8 Ventures, echoed these considerations, stating:

“Initiatives bend the knee and pray to the gods in hopes that by taking part in this recreation, their token may, simply may, be included in a reserve. All the above to do what? To pump the token’s worth.”

WLFI has not publicly addressed these criticisms. Cointelegraph reached out for remark however has not acquired a response as of publication.

Sui market response and strategic implications

Following the partnership announcement, SUI’s worth surged 12%, briefly approaching the $3 mark earlier than settling at round $2.85, representing a 5.7% achieve from pre-announcement ranges.

Zak Folkman, co-founder of WLFI, mentioned within the announcement that Sui was chosen for its “American-born” innovation and scalability. Some buyers view this as an indication that WLFI’s subsequent transfer shall be to focus on different US-based crypto tasks, particularly these with Eric Trump’s implicit endorsement.

In a December interview, Eric Trump revealed that he holds SUI, additional fueling hypothesis about its favorability inside WLFI’s ecosystem.

Folkman added:

“Given our plans to help foundational DeFi belongings within the coming months, collaborating with Sui was an apparent resolution.”

Sui’s object-centric knowledge mannequin and parallel transaction execution make it an interesting infrastructure for DeFi purposes. Not like conventional account-based fashions, Sui buildings belongings as impartial objects, enabling sooner possession transfers and instantaneous updates with out requiring full network-wide consensus. This design enhances liquidity motion, collateral administration and good contract effectivity in DeFi.

WLFI’s holdings and ETF hypothesis

Onchain knowledge suggests WLFI holds round $80 million in crypto belongings, based mostly on wallets tracked by Arkham Intelligence. Nonetheless, a good portion of its holdings has been transferred to Coinbase Prime, making it tough to hint its full asset distribution.

On March 6, onchain analyst EmberCN estimated that WLFI holds a complete of $336 million in crypto, together with Ether (ETH), Wrapped Bitcoin (WBTC), Tron (TRX), Chainlink (LINK), Aave (AAVE), Ethena (ENA), MOVE, Ondo (ONDO) and Sei (SEI). The analyst additionally famous that the agency just lately added $21.5 million in WBTC, ETH and MOVE forward of the White Home Crypto Summit on March 7.

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“As a result of these belongings had been transferred to Coinbase Prime by WLFI a while in the past, there isn’t any strategy to know whether or not they have been bought,” EmberCN wrote in a translated submit, including that WLFI claims they haven’t been liquidated.

If WLFI nonetheless holds these belongings, the present paper loss stands at roughly $88 million. The most important share loss is in ENA (-63%), whereas the biggest financial loss is in ETH (-$67.35 million, down 31%), EmberCN added.

Sui, in the meantime, has hinted at rising its presence in Washington, DC. On Feb. 4, Mysten Labs co-founder Adeniyi Abiodun revealed the mission was partaking in “thrilling conversations” that might develop its ecosystem. A month later, Abiodun prompt that SUI might be thought-about for ETF inclusion. On March 6, a Delaware submitting indicated that Canary Capital could also be exploring an ETF for SUI, although previous pretend ETF filings have made the business cautious of untimely hypothesis.

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