A cryptocurrency project associated with Donald Trump, World Liberty Financial (WLFI), has implemented a governance-driven strategy to counter its initial price underperformance by reducing the circulating supply of its native token. This initiative, overwhelmingly approved by the community, aims to bolster the token’s value through systematic buybacks funded by treasury liquidity fees, with purchased tokens subsequently being permanently removed from circulation.
Supply Reduction Through Strategic Buybacks
The core of this new strategy hinges on utilizing 100% of the project’s treasury’s liquidity fees to acquire WLFI tokens from the open market. These acquired tokens will then be directed to a burn address, thereby permanently decreasing the overall supply. The initiative is designed to benefit long-term tokenholders by increasing the relative weight of their holdings as tokens held by less committed participants are removed. The project is also exploring additional revenue streams to further support these buyback operations.
Market Impact and Initial Performance
This governance vote occurred approximately three weeks after the official launch of the WLFI token on September 1st. The token experienced a significant price decline of 40% within its first three days, reportedly resulting in substantial losses for some holders, including influencer Andrew Tate who incurred a $67,000 loss on a position on the decentralized exchange Hyperliquid. Despite an earlier burn of 47 million tokens on September 3rd, the token’s downward trajectory continued, with an overall decline of over 28% since its inception. However, recent data indicates a positive shift, with a 5.04% increase in the last 24 hours and a 17% rise over the past seven days, though the token remains below its all-time high of $0.3082.
Liquidity Positions and Market Neutrality
Following the governance approval, WLFI will establish liquidity positions across major blockchain networks including Ethereum, BNB Chain, and Solana. These positions are intended to facilitate open market buybacks of WLFI tokens. A notable omission in the current plan is an estimation of the platform’s fee generation, which currently makes it challenging to project the precise market impact of these buyback activities.
The Broader Landscape of Buybacks and Burns
The practice of using treasury or fee revenue for token buybacks has seen increasing adoption within the cryptocurrency sector since the beginning of 2024. Market data and industry observers have noted a rise in weekly buyback volumes and a discernible signal effect accompanying buyback announcements. The efficacy of token burns can vary significantly. While projects like Shiba Inu have implemented high-nominal burns, these have often resulted in only short-lived price rallies due to the sheer initial supply. In contrast, Binance’s consistent quarterly BNB burns, such as the 1.59 million BNB removed in July 2025, have demonstrably reduced its circulating supply over time.
Ethereum’s implementation of EIP-1559 serves as a prime example of structural burning influencing token economics. By permanently removing the base fee from transaction costs, this upgrade has impacted ETH’s supply and is widely credited with reinforcing its scarcity narrative, irrespective of broader market fluctuations. While buybacks and burns are mechanically sound in reducing supply and potentially supporting prices, their ultimate impact is often contingent on the scale, persistence, and transparency of these programs, alongside prevailing market conditions.
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Michael combines data-driven research with real-time market insights to deliver concise crypto and bitcoin analysis. He’s passionate about uncovering on-chain trends and helping readers make informed decisions.