The token of decentralized finance (DeFi) protocol Aave (AAVE) fell more than 10% in 24 hours, dropping from around $385 to as low as $339, following conflicting statements regarding a proposed token allocation from World Liberty Financial (WLFI), a DeFi platform backed by members of former U.S. President Donald Trump's family. The rumors stemmed from an October 2024 community proposal suggesting Aave's decentralized autonomous organization (DAO) would receive 7% of WLFI's governance tokens and 20% of protocol revenues generated through WLFI's deployment on Aave v3.
On Saturday, WLFI denied these claims through blockchain reporter Colin Wu, calling them "false and fake news." However, Aave founder Stani Kulechov had earlier referenced the proposal as "the art of the deal" and suggested the arrangement was still under discussion, creating confusion and sparking debate across crypto forums. Following the denial, AAVE recovered slightly to $352.
The incident occurs amid growing institutional interest in DeFi, with total value locked (TVL) rising to $167 billion, nearing the all-time high of $212 billion from December 2021. WLFI is set to begin unlocking its tokens for trading on September 1, with early backers able to unlock 20% of their holdings starting August 25. The token debuted on Binance, Bybit, and OKX perpetual futures contracts between $0.40 and $0.42, giving WLFI a fully diluted valuation above $40 billion.
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