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), can 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 as a consequence of its ties to the household of US President Donald Trump. Whereas WLFI insists that none of Trump’s relations 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 just isn’t fully sudden, as Eric Trump, the president’s son, has publicly expressed assist 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, according to 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 presently ranks among the many high 20 cryptocurrencies and is a top-10 blockchain in decentralized finance (DeFi) by complete worth locked (TVL), standing at $1.283 billion, according to DefiLlama. 

The Sui group and its improvement group largely celebrated the partnership. Nonetheless, business contributors 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 group members query whether or not it brings something new to DeFi or whether it is merely repackaging current Aave companies under a special model.

Mike Dudas, managing accomplice at crypto enterprise fund 6MV and a self-identified WLFI investor, dismissed the challenge 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 slightly 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 enjoying this sport, their token would possibly, simply would possibly, be included in a reserve. The entire 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 obtained 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, stated within the announcement that Sui was chosen for its “American-born” innovation and scalability. Some traders view this as an indication that WLFI’s subsequent transfer can 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 assist foundational DeFi property within the coming months, collaborating with Sui was an apparent choice.”

Sui’s object-centric information mannequin and parallel transaction execution make it an interesting infrastructure for DeFi functions. Not like conventional account-based fashions, Sui buildings property as unbiased objects, enabling sooner possession transfers and prompt 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 information suggests WLFI holds round $80 million in crypto property, primarily based 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 House Crypto Summit on March 7.

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

If WLFI nonetheless holds these property, the present paper loss stands at roughly $88 million. The biggest share loss is in ENA (-63%), whereas the most important 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 challenge was participating in “thrilling conversations” that might broaden its ecosystem. A month later, Abiodun urged 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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