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World Liberty Financial (WLFI), the Trump family-backed decentralized finance (DeFi) protocol, has approved a governance proposal to allocate up to 5% of its unlocked WLFI token treasury to incentivize the growth and liquidity of its USD1 stablecoin.
The proposal passed with 77.75% community approval on January 4, 2026, authorizing the use of treasury holdings for partnerships, listings, and incentive programs across centralized finance (CeFi) and DeFi platforms.
This move aims to accelerate USD1 adoption, which recently surpassed a $3 billion market cap following Binance's 20% yield program launch.
Key Takeaways
- WLFI unlocks $120M treasury for USD1 incentives, targeting CeFi/DeFi listings to drive adoption.
- USD1 stablecoin hits $3B market cap, leveraging Binance 20% yields for liquidity growth.
- Governance vote passes 77.75%, empowering token holders to direct ecosystem expansion.
- RWA tokenization launches January 2026, backing oil/gas assets with USD1 for real utility.
- Treasury cap at 5% minimizes dilution, focusing on long-term WLFI value capture.
Background on WLFI and USD1
World Liberty Financial launched in September 2024 as a DeFi platform focused on stablecoin issuance, lending, and real-world asset (RWA) tokenization.
Backed by the Trump family, including Donald Trump Jr. and Eric Trump, WLFI positions itself as a bridge between traditional finance and blockchain, emphasizing U.S. dollar-pegged assets.
The protocol's native governance token, WLFI, enables holders to vote on ecosystem decisions, with a total supply of approximately 20 billion tokens, of which 19.96 billion are held in the treasury.
USD1, WLFI's flagship stablecoin, is fully backed by short-term U.S. government Treasuries, U.S. dollar deposits, and cash equivalents, ensuring 1:1 redeemability. Launched in March 2025, USD1 has grown rapidly, achieving a $3.07 billion supply within months, driven by integrations on chains like Solana, BNB Chain, and Ethereum.
It supports use cases in DeFi lending, payments, and trading, with recent expansions including Binance spot pairs for BTC/USD1, ETH/USD1, SOL/USD1, and others.
USD1's daily volume has exceeded $1 billion on certain days, surpassing established stablecoins like USDC in specific metrics. The stablecoin's adoption is further bolstered by institutional partnerships, such as SolvBTC for Bitcoin borrowing and Lista DAO for pufETH collateralization.
Prior to this approval, WLFI conducted a $10 million WLFI token buyback and implemented 100% protocol fee burns, both passing with over 99% governance support.
These actions reflect a deflationary strategy, reducing supply while enhancing utility. However, 80% of WLFI tokens sold to investors remain locked, limiting immediate market pressure.
Details of the Approval
The governance proposal, posted on December 18, 2025, sought authorization to deploy less than 5% of unlocked WLFI tokens, valued at approximately $120-140 million at current prices, to fund targeted incentives.
Specific uses include subsidizing exchange listings, liquidity provision for trading pairs, and integrations into lending and payment platforms. Voting options were approval, rejection, or abstention, with the process conducted on-chain for transparency.
The vote opened on December 28, 2025, and closed on January 4, 2026, with 77.75% in favor.
Supporters argued that boosting USD1 creates ecosystem-wide value, accruing benefits to WLFI holders through increased utility and network effects. Critics expressed concerns over treasury spending and potential dilution, though the proposal's cap at under 5% addressed some dilution risks.
WLFI emphasized that incentives would target high-profile CeFi and DeFi partners to drive real-world usage.
This follows Binance's December 2025 initiatives, including zero-fee trading for VIP users on key USD1 pairs and converting Binance-Peg BUSD collateral to USD1 at a 1:1 ratio.
Additionally, WLFI plans RWA tokenization launches in January 2026 for assets like oil, gas, and timber, backed by USD1.
Implications for Growth and Liquidity
The incentives are expected to enhance USD1's competitiveness in a crowded stablecoin market dominated by USDT ($80 billion on TRON alone) and USDC.
By funding liquidity pools and partnerships, WLFI aims to increase on-chain transactions, with TRON's low fees already supporting USD1's efficiency.
Recent milestones, such as USD1's $3 billion market cap surge (up 6% in 24 hours post-Binance yield program), indicate strong momentum.
Broader ecosystem benefits include debit card rollouts and app integrations mid-2026, positioning USD1 for payments and DeFi. However, risks include execution challenges and market volatility, with WLFI's team recently moving $20 million to exchanges.
Conclusion
WLFI's incentive approval marks a tactical shift toward active growth, deploying treasury resources to solidify USD1's position in DeFi.
Monitor on-chain metrics and partnerships for execution success.
Read Next:
- 2025 Stablecoin Year-End Report
- 2025 Stablecoin Spending Report
- Who Is Winning the Stablecoin Infrastructure Race?
FAQs:
1. What is USD1?
USD1 is WLFI's U.S. dollar-pegged stablecoin, backed 1:1 by Treasuries and cash, designed for DeFi and payments.
2. How much is being allocated?
Up to 5% of unlocked WLFI treasury, approximately $120-140 million, for incentives and partnerships.
3. Why approve incentives now?
To accelerate USD1 growth amid competition, enhancing liquidity and ecosystem utility for WLFI holders.
4. What are the risks?
Potential dilution from treasury use and execution issues, though capped allocation mitigates impacts.
5. How does this affect WLFI token?
Boosts utility through USD1 adoption, with deflationary measures like fee burns supporting value.
Disclaimer:
This content is provided for informational and educational purposes only and does not constitute financial, investment, legal, or tax advice; no material herein should be interpreted as a recommendation, endorsement, or solicitation to buy or sell any financial instrument, and readers should conduct their own independent research or consult a qualified professional.
