Donald Trump’s World Liberty Financial, Aave Integration To Boost DeFi?

Donald Trump’s decentralized finance (DeFi) project, World Liberty Financial, has submitted a proposal to AaveDAO, seeking approval to launch its platform as an instance on Aave v3. Trump is employing this strategy to join the DeFi space after announcing borrowing and lending services on Ethereum network.

Potentially, the partnership may introduce new users and liquidity to Aave, a decentralized lending protocol for Ethereum.

Proposal Details and AaveDAO’s Role

The proposal submitted to Aave details how World Liberty Financial plans to leverage Aave’s protocols to deliver its solutions. The Trump project will pay 20% of the Aave protocol fees to AaveDAO and 7% of the total supply of WLF tokens.

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This token distribution would enable the AaveDAO to participate in governing World Liberty and its liquidity mining incentives.

The integration will seek to increase liquidity in Ethereum (ETH) and Wrapped Bitcoin (WBTC), together with stablecoins such as USD Coin (USDC) and Tether (USDT).

As per the official announcement, it will attract a new class of DeFi users. Those familiar with the Donald Trump brand but not so much with crypto lending and borrowing.

Donald Trump’s DeFi Project To Focus on Attracting New Users

As such, World Liberty Financial has aimed to be an easy-to-use DeFi platform for investors. The project’s team explained that the platform’s design provides easy borrowing and lending of digital assets, especially for newcomers.

Trump and his associates also expect Aave to attract many new users from the segment who are not too familiar with DeFi solutions. The proposal also underlined that the platform will use the same reserve factor model as Aave to allow interoperability between the two protocols.

The profit-sharing agreement between AaveDAO and World Liberty Financial shall be governed by a trustless smart contract to foster transparency and eradicate fraud risks. Concurrently, the timing of World Liberty Financial’s proposal comes at the same time as Aave Labs release of the Aave V3.2 upgrade.

This upgrade brings Liquid eMode to enhance borrowing and collateral management. It offers more flexibility, better gas efficiency, and customizable risk management.

World Liberty Financial: Expansion Plans and Regulatory Considerations

If the partnership is approved and successful, World Liberty Financial plans to extend its services to Scroll, a Layer-2 scaling solution on Ethereum. This may also lead to further expansion of the project’s user base and liquidity. This would enable the platform to compete with other DeFi projects.

However, the project has a constraint in that it has to go through a number of regulatory procedures. At the moment, only accredited investors are allowed to use the platform due to the rules set by the U.S. Securities and Exchange Commission (SEC).

World Liberty Financial, nevertheless, has suggested that it will one day offer its services to all Americans. However, it has yet to state how it will operate despite regulations that have grounded other U.S-based DeFi platforms.

AaveDAO’s Response and Next Steps

The new proposal has been presented to the AaveDAO for debate and the community members will vote on the matter. WLF Token holders of World Liberty Financial also need to approve the plan through another vote. The result of these governance votes will decide the future of the partnership.

In the event that the proposal is passed, the partnership between World Liberty Financial and Aave could increase liquidity. It can also extend the reach of DeFi to the general public. Nevertheless, the future still holds many unanswered questions, including the issues of compliance and the sustainability of the platform.