Donald Trump-linked startup World Liberty Financial has initiated a buyback program for the WLFI governance token, funded by revenue from the USD1 stablecoin reserves. The initiative is intended to attract long-term holders and partially offset the asset's price losses.
Since the US midterm elections, WLFI has fallen in price by roughly 10%, and since the start of the year it has lost more than 60%. Against this backdrop, investors are expecting support, which may partially come from stablecoin reserve revenue.
Impact of the WLFI buyback on USD1's prospects
World Liberty explains the buyback as an effort to attract users to the project's governance. The buyback will become a permanent element of the company's strategy. The focus on long-term investors reduces the influence of short-term traders on governance processes.
The starting capital for the buyback includes revenue from the USD1 stablecoin reserves and other sources. The developers do not disclose the exact shares of these inflows.
If reserve revenue provides the majority of the funds, demand for USD1 will begin to indirectly push WLFI's price higher. In that case, an increase in reserves would raise yield, and the buyback would provide more money. However, this logic would stop working if third-party capital sources play the main role.
World Liberty was created in 2024 by Donald Trump, three of his sons, and a group of partners. The president's family holds 38% of the company and earns from the sale and use of the WLFI coin and the USD1 stablecoin.
Does a buyback funded by internal revenue show real demand
Buying back tokens with the company's own revenue does not prove the existence of market demand. Only WLFI's price dynamics after the buyback is reduced will show demand from buyers.
Stablecoin issuers typically earn from the yield on reserve assets. This approach may also spread to other projects with their own tokens.
Trump (TRUMP) and Melania Meme (MELANIA) tokens — two memecoins associated with the Trump name — hit new lows after the Democrats' victory in Congress.
Justin Sun, founder of Tron, has filed a request with a US federal court demanding sanctions against World Liberty over the freezing of WLFI in his accounts. The company claims the block is a standard security measure.
Since January, Democrats have led key oversight committees. World Liberty in particular may become the subject of the first review.
Ultimately, regular coin buybacks funded by reserve revenue will link the token's price to stablecoin growth as strongly as to the overall market sentiment.
Cryptalist analysis: The buyback program creates a mechanism of internal support for WLFI, but its effectiveness depends directly on the transparency of the USD1 revenue structure, which the issuer has not yet disclosed. For institutional participants, the key signal will not be the buyback itself, but the sustainability of demand for the stablecoin and the project's ability to withstand regulatory pressure from the new congressional committees.