Source: Galaxy

Translation: Golden Finance

After a month of waiting, World Liberty Financial (WLFI) token holders will see the token available for trading on the spot market at 8:00 AM Eastern Time on Monday, September 1 (8:00 PM Beijing Time on September 1). A month ago, WLFI holders voted in favor of the project's third governance proposal, with 99.94% of the token votes supporting the token's tradability.

The first on-chain unlocking window will be opened through the "lockbox" of the project led by the Trump family, allowing eligible buyers to claim 20% of their presale allocation, with subsequent unlocks reserved for future governance votes. The on-chain "lockbox" contract currently holds approximately 15 billion WLFI, accounting for 15% of the project's total supply. This will create a short-term liquidity event, during which nearly 3 billion WLFI tokens (valued at approximately $950 million based on recent prices) will begin trading, followed by DAO-driven supply decisions in the coming weeks and months.

Notably, among the 85,873 wallets holding WLFI before the lockbox launch, over 30,000 have locked all their WLFI in the contract (a prerequisite for trading).

Galaxy's Perspective:

By any standard, this is one of the most active and engaged groups of token holders in the cryptocurrency space. More than a third of holders are active on-chain, continuously updating and interacting with the WLFI smart contract, which is particularly notable in the DeFi space. Most participants in the DeFi sector face the issue of low governance participation—dynamic protocols are often used to tax idle holders.

While the active user base is commendable, the large number of wallets locking all assets in the staking system indicates a widespread willingness to trade. The first batch of WLFI holders who bought at $0.015 per token achieved a 20x return, while the second batch who bought at $0.05 per token achieved about a 6x return. The willingness to hedge and cash out these positions will be high; holders can simply calculate that by selling a portion of the 20% unlocked share, they will recover an equivalent dollar amount of their entire investment principal.

Based on pre-market trading levels, the fully diluted value of WLFI is approximately $20 billion at $0.20 and about $42 billion at $0.42. With 20% of the approximately 15 billion WLFI balance locked up set to unlock on September 1, we expect at least 3 billion tokens to become liquid. At $0.20 per share, this equates to about $592 million in circulation; at $0.42 per share, this equates to about $1.24 billion. In other words, the first issuance is 20% of the presale portions at $0.015 and $0.05, accounting for up to 5% of the total supply—exactly the type of token that Alameda has historically been keen to trade, with low liquidity and high FDV.

Pre-market trading is very active. Binance's open interest (OI) is close to $250 million, with a 24-hour trading volume exceeding $500 million. WLFI trading volume on the Hyperliquid platform exceeds approximately $1.5 billion, with open interest valued at about $60 million. Due to structural weaknesses, the pre-market should always maintain a cautious stance: prices are a consensus among participants, with no external spot oracle, allowing market forces to drive prices. Last week, a well-funded trader achieved significant success in Hyperliquid XPL pre-market trading, nearly doubling the price in a short time and triggering widespread short liquidations, exemplifying this dynamic. Hyperliquid's "hyperps" and nearly all pre-market financing are calculated based on moving averages of closing prices rather than external spot references, which may amplify these events.

The first wave floats between $0.20 and $0.42, representing hundreds of millions or even over a billion nominal tokens entering the circulating market. As the spot market opens and cross-exchange liquidity rebalances, such scale typically causes significant basis volatility and capital tilt. With the start of spot trading, the cross-exchange basis should contract, but volatility will not disappear. Despite active trading, the scale of the unlock may still exceed the current pre-market positions, leading to significant price fluctuations.

Putting aside the numbers, it is important to remember what the WLFI token represents. The terms of WLFI's "Gold Paper" stipulate that the token is solely for governance: no revenue, no distribution, no equity, and no rights to protocol cash flows. The same terms disclose that the company has fixed granted 2.25 billion WLFI to DT Marks DeFi, LLC (affiliated with Donald J. Trump) and reached a revenue-sharing agreement that allocates 75% of net protocol revenue to that entity, with 25% distributed to insiders other than token holders. WLFI governance votes are merely for signaling, and the World Liberty team can unilaterally decide to overturn those votes. The most profitable project for World Liberty Financial to date is its $1 stablecoin (developed by Binance Code), which was launched without any forum posts or governance votes.

If you are a memecoin trader or interest rate trader, good luck. If you are more focused on fundamentals, please reread the above paragraphs.

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