Proposal: WLFI Governance Staking System – General

This proposal introduces the WLFI Governance Staking System. As governance tokens, WLFI are the consensus mechanism for WLF in determining the WLFI community’s views on the direction of the WLFI ecosystem. Active governance participation will enhance the technological operation, security and confidence in reflecting this consensus through the governance platform. The core objectives are to: (1) encourage active participation in WLFI governance, (ii) require staking as a prerequisite for governance voting for unlocked tokens, (2) reward participation in WLFI governance, (3) create a tiered node structure that incentivizes long-term ecosystem participants which have committed the most to governance through access to USD1, and (4) establishes a mechanism to prioritize partnership deal flow toward projects actively supporting WLFI governance and the WLFI ecosystem.

WLFI wishes to further incentivize more significant participation in governance, and to provide additional benefits for USD1 usage. In addition, in the recent USD1 expansion phase, market makers captured millions in arbitrage profits (~15 bps per minting/selling cycle), and WLFI additionally paid millions in subsidies to facilitate redemptions. This proposal redirects this value from a small number of intermediaries to long-term ecosystem participants, while simultaneously creating structural demand pressure on competing stablecoins.

Going forward, governance votes by unlocked tokens will require staking. Token holders who have not staked their unlocked $WLFI will not be eligible to participate in governance decisions. Holders of locked tokens will continue to be eligible to participate in voting. This ensures that voting power is held by participants with long-term alignment to the protocol who elect to participate in the governance consensus mechanism, not short-term holders or speculators.

Key parameters:

• Anyone holding unlocked $WLFI can stake. Minimum lock-up period of 180 days.

• Governance power is weighted by both staking amount and remaining lock-up duration, using a non-linear formula (square root weighting) to prevent excessive concentration of voting power. All current limitations on voting power would be eliminated by the proposal.

• Governance rights are non-transferable and dynamic—they adjust as the lock-up period decreases.

• All stakers earn a base $WLFI staking reward (target APR ~2% for active participation in governance). Because staking is intended to incentivize active governance participation, only stakers who have participated in governance votes at least twice during the governance lock-up period will receive staking rewards.

• The staking reward rate will be paid out of the WLFI treasury and determined by WLFI in its discretion and based on what it determines will incentivize governance participation and other factors. It is not tied to or contingent on revenues or operational performance metrics.

• Whether, when or how or much $WLFI is determined solely by the staker.

• $WLFI incentives on USD1 deposits made on WLFI Markets provid ed by Dolomite. Non-staking participants do not receive USD1 deposit incentives.

To encourage more significant participation in governance, additional incentives would be available for nodes. Nodes are participants who stake a higher threshold of $WLFI (proposed: 10M $WLFI, approximately $1M at current prices). In addition to all base staking privileges, Nodes receive the right to connect directly with third party market makers or other providers who purchase USDT, USDC, or other supported stablecoins to USD1 at 1:1 parity and can provide off-ramp USD1 directly to USD.

How it works:

• WLFI will partner with licensed market makers who facilitate these 1:1 transactions.

• WLFI subsidizes the market makers to maintain 1:1 parity, effectively passing the arbitrage opportunity—which today is captured exclusively by institutional market makers at ~10–15 bps—to Node stakers. WLFI would reserve the right to modify or discontinue subsidies at any point in time.

• Nodes must complete standard KYC and onboarding procedures required by the licensed market makers.

• Nodes also receive invitation/team-building rights and eligibility for team-based point rewards. An additional reward based on USDT→USD1 conversion volume is issued in the governance token (limited to the first 1,000 Nodes, settled every six months).

Strategic rationale: WLFI wishes to further incentivize more significant participation in governance, and to provide additional benefits for USD1 usage. In the recent USD1 expansion phase, market makers captured millions in risk-free arbitrage profits (~15 bps per minting/selling cycle), and WLFI additionally paid millions in subsidies to facilitate redemptions. The Node mechanism redirects this value from a small number of intermediaries to long-term ecosystem participants, while simultaneously creating structural demand pressure on competing stablecoins.

For the largest participants in governance staking, guaranteed access to the WLFI team for partnership discussions will be provided given their significant commitment to WLFI governance and the WLFI ecosystem. Super Nodes are governance participants who stake a higher threshold of $WLFI (proposed: 50M $WLFI, approximately $5M at current prices). Super Nodes receive all Node privileges, plus additional potential partnership benefits. Super Node status does not guarantee partnership with WLFI as that will be subject to commercial, technical and other considerations.

Additional Super Node privileges:

• Guaranteed direct access to the WLFI team for partnership discussions. WLFI currently receives more partnership inquiries than it can productively engage with. The Super Node requirement serves as a filter to prioritize projects and platforms that are actively supporting and participating in the WLFI ecosystem, rather than those seeking partnership on a purely opportunistic basis.

• Potential economic incentive eligibility. Super Nodes may be eligible for additional economic incentives on approved platform integrations, subject to WLFI compliance review, due diligence, and commercial agreements.

Strategic rationale: This rewards WLFI holders who have demonstrated the most commitment to WLFI governance and the WLFI ecosystem with additional opportunity to engage in the future of the WLFI ecosystem and potential commercial arrangements. This creates a USD1 distribution network where each Super Node effectively acts as a mini-distributor, with built-in alignment to the ecosystem. It also provides a scalable way to manage the current volume of inbound partnership requests by requiring meaningful economic commitment before engaging in partnership discussions.

• FOR — I support the implementation of the WLFI Governance Staking System as described in this proposal.

• AGAINST — I do not support the implementation of the WLFI Governance Staking System as described in this proposal.

• ABSTAIN — I choose not to vote for or against this proposal but wish to have my participation recorded.

Quorum Requirement:

This proposal requires a quorum of 1,000,000,000 of eligible WLFI voting tokens to be considered valid. A simple majority of votes cast (excluding abstentions) is required for the proposal to pass.

Voting Period:

The voting period for this proposal will be 7 days from the date the proposal is put forward to Snapshot Vote..

If this proposal is approved by the WLFI community, the following implementation steps are anticipated:

• Phase 1: Launch of governance staking for all unlocked $WLFI holders. Staking rewards and USD1 deposit incentives activated.

• Phase 2: Node tier activation. Licensed market maker partnerships finalized. OTC conversion rights and KYC onboarding pathways made available to qualifying Node stakers.

• Phase 3: Super Node tier activation. Partnership access and revenue share framework established for qualifying Super Node stakers.

Specific timelines for each phase will be communicated by the WLFI team following the conclusion of the voting period.