Author: Web3Mario Source: X, @web3_mario

Summary: Discovered an interesting topic during the holiday, and researched World Liberty Financial, a Decentralized Finance project with involvement from members of the Trump family in the high-heat of the past two days. In the twitter space on September 17th, more detailed commitments were made, including the allocation of WLFI Tokens, the vision of the project, etc. Trump also spent a long time in the meeting expressing optimism about the field of encryption. So for a project that seems not so 'Web3 style', how should we grasp its value? On this point, the author did some research, gained some insights, and is sharing with everyone. Overall, I believe the core value of World Liberty Financial lies in finding new fundraising channels to alleviate the disadvantage of Trump's 2024 campaign in fundraising. Therefore, the essence of investing in WLFI Tokens is a bet on Trump's election, which is a form of political contribution.

The negative image of the joint creation and the lack of specific roadmaps make World Liberty Financial quite controversial.

The background of this project has been introduced in many articles. Here is a brief review. In fact, the project has been quite controversial since its announcement, with controversy focusing on three aspects:

Negative background of the co-founders: Considering the involvement of Eric Trump and Donald Trump Jr., who have limited experience in the encryption industry and are more associated with real estate, it is widely believed that the actual operators of the project are their co-founders, Zachary Folkman and Chase Herro. Trump mentioned in the live broadcast that Herro and Folkman were introduced to his sons by real estate investor Steve Witkoff. Prior to this, the two had collaborated on a Decentralized Finance lending project called Dough Finance, which was established in April 2024 and suffered a Flash Loans attack on July 12, leading to a loss of more than 1.8 million USD, after which the project entered a stagnant state. In addition, their resumes do not align with the typical elite path of most technology or financial industry entrepreneurs. Folkman's previous influential project was called 'Data Hotter Girls', a dating coaching seminar, while Herro has a criminal record.

The product roadmap is not clear: Although the Trump family has been promoting the project vigorously with vague descriptions and promises of doing many things at the same time over the past month, in fact, the project is not likely to publicly release some more detailed and accurate plans or descriptions. In this Twitter space, Folkman seems to give some descriptions, the project is not trying to create brand new financial tools, but aims to improve the usability of Decentralized Finance. During the fireside chat, Donald Trump Jr. talked about his family's experience of "debanking," which refers to the difficulties that some individuals or companies encounter when obtaining credit from traditional Financial Institutions. So it's not hard to see that the initial focus of the project's launch will still be on the lending scene, but such information seems insufficient to convince most people and acknowledge its vision and business logic.

Centralization Issue of WLFI Token Economics: In this interview, Folkman also provided a detailed distribution plan for WLFI Token. 20% of the project's tokens are allocated to the founding team, including the Trump family, 17% of the tokens are used for user rewards, and the remaining 63% of the tokens will be available for public purchase. However, such allocation proportions seem to be quite different from traditional Web3 projects. Tokens are basically concentrated in the hands of the team and Whales, and there is no allocation for community incentives.

So why would such a seemingly unattractive project receive strong support from the Trump family, especially at this sensitive time near the election? I think the core reason is to find new fundraising channels and alleviate the disadvantage of fundraising for Trump's 2024 campaign. Therefore, the essence of investing in WLFI Token is a bet on Trump's election, a form of political contribution.

Trump's current campaign funding has a clear disadvantage and hopes to find more flexible fundraising channels

We know that the federal government of the United States is composed of three parts, the legislative, judicial, and executive branches, with the executive branch obtaining positions through appointment, recruitment, or examination. The legislative branch, specifically Congress, is composed of the Senate and the House of Representatives, with members of both houses being elected, while the judicial branch is in between the two. Different states have different regulations, and during his presidency, Trump appointed more than 200 federal judges, greatly altering the ideological composition of the federal judicial system. This is also the reason why he was able to maintain countermeasures during the legal litigation crisis in the first half of the year.

The essence of the election is a political show, which requires a large amount of funding for publicity in order to gain more support from voters, and the channels of publicity cover all aspects online and offline. Considering that the entire publicity actually started nearly a year before the election, the long cycle requires far more capital consumption than events such as movie releases or concerts. The pace of publicity is affected by some unexpected events, but it is highly likely to maintain an increasing trend to allocate budgets, and the closer to the general election, the faster the expenditure.

Due to having legislative power, interest groups will form between the government and business during this process. Some large-scale entrepreneurs will choose to support some politicians in exchange for the promotion of certain bills that align with their own interests after the politician's successful election. This donation is called political contribution. In order to prevent excessive rent-seeking and the worst form of corruption, U.S. laws have designed some acts to standardize the entire process. Among them, '527 organization' is a tax-exempt organization designed for candidates to raise funds to support elections, with many specific sub-types based on the scale of capital received and the different ways of use.

In general, the performance of politicians in some key events or their encounters with sudden events will significantly affect the amount of funds they raise, because the support of sponsors to politicians is also phased. For example, a bad debate or a sudden scandal will affect the sponsor's confidence in the entire future election, thus stopping donations. Therefore, the fundraising situation can accurately reflect the performance of the candidates.

After introducing this background knowledge, let's take a look at the difference in fundraising between the Trump 2024 campaign team and the current Harris 2024 campaign team. This difference mainly manifests in two aspects, the scale of funds and the efficiency of allocation.

First of all, in terms of fundraising, the fact is that the Democratic Party has always been ahead of the Republican Party in terms of fundraising scale. This situation has become more and more intense after Harris was confirmed, and it seems that the supporting forces within the Democratic Party have been integrated, and they have started to support this candidate with relatively little experience. Up to now, the Harris team has raised a total of 770 million US dollars and has spent 440 million US dollars. The Trump team has raised a total of 570 million US dollars and has spent 310 million US dollars. Whether it is from the perspective of remaining funds or past investments, the Trump team undoubtedly has a significant disadvantage. This is also why, after being assassinated, in addition to successfully forcing the Democratic Party to replace Biden, Trump's momentum has been declining. Moreover, in the first presidential debate last week, in terms of debate skills, Harris undoubtedly performed better, which enabled her to raise 50 million US dollars within 24 hours after the debate, demonstrating her strong fundraising ability.

Of course, it's also interesting to see the differences in supporters between the two. After Biden attracted support from billionaires like Michael Bloomberg and LinkedIn founder Reid Hoffman, Harris herself has also gained support from several wealthy individuals, including Hoffman, Netflix co-founder Reed Hastings, former Meta COO Sheryl Sandberg, and philanthropist Melinda French Gates (Bill Gates' wife). On July 31, over 100 venture capitalists signed a letter supporting Harris' candidacy and pledging to vote for her, including entrepreneurs Mark Cuban, investors Vinod Khosla and Lowercase Capital founder Chris Sacca, and other billionaires. Trump's core supporters include banker Timothy Mellon, wrestling tycoon Vince McMahon's wife Linda McMahon, energy executive Kelcy Warren, BCH Supply founder Diane Hendricks, oil tycoon Timothy Dunn, and prominent conservative donors Richard and Elizabeth Uihlein, as well as TSL founder Elon Musk. However, it can be seen from this list that Harris' supporters are mostly from emerging technology industries, while Trump's supporters focus on traditional industries. In terms of online promotion, Harris undoubtedly has a stronger advantage, thanks to Musk's acquisition of Twitter. This helps Trump alleviate this disadvantage, so you will find that after Trump returns to Twitter, his online marketing will undoubtedly revolve around this platform.

And in terms of specific funding sources, Harris's external funding channels are mainly through the Carey Committee, while Trump relies mainly on SuperPAC. Both organizations belong to the 527 organization just introduced, with the advantage of unlimited funding. However, in terms of fund expenditure, the former has greater flexibility. The Carey Committee has two separate accounts: one for traditional restricted donations (which can be donated directly to candidates and parties), and the other for unrestricted independent expenditures (used for advertising, publicity, etc.). However, Super PACs cannot directly coordinate with a candidate's campaign team or party, nor can they donate directly to a candidate. This makes Trump's team much weaker in terms of funding efficiency compared to Harris's team.

This will break everyone's traditional impression that Trump, as a wealthy businessman, should have more advantages in terms of funds. However, the situation is exactly the opposite. The Harris team currently has a clear funding advantage, and this advantage is further expanding. So, at this time, it is easy to understand why such an immature encryption project is launched at the risk, which also shows the hope of finding more flexible fundraising channels through the encryption field. This can also be seen as a practical expression of pleasing encryption enthusiasts and voters in the past. So it is worth taking some risks for this, and of course, this also explains why the project is based on the explanation that WLFI will follow Regulation D for fundraising without a detailed roadmap, which is a guarantee to control risks within an acceptable range. This is the key to the problem.

So for the Trump team, there are actually many ways to benefit from this project, besides direct ICO sales. There is also an interesting project, which is to cash out using the lending platform. Do you still remember the issue that Donald Trump mentioned about his family facing de-banking? Assuming that World Liberty Financial successfully launches as a lending protocol and attracts certain funds, the team will be able to use a large amount of WLFI tokens controlled as collateral to lend real money on the platform without causing significant impact on the secondary market price, just like the founder of Curve. This can indeed alleviate the problems they encounter.

So considering these, I have no doubt about the start of the project, because the essence of investing in WLFI Token is a bet on Trump's election, which is a kind of political donation. This scheme will be favored by many billionaires in the encryption field. The future growth depends on the result of this game. If Trump is successfully elected, such a resource-driven project will easily find a specific business direction. And if it fails, undoubtedly, in an environment exhausted by various litigations, the Trump family should also have no time to deal with this. In all, as small investors, we still need to be cautious and participate carefully.