Author: Christopher Roark
Compiled by: Tao Zhu, Jinse Finance
The token launch of former US President Donald Trump has failed to some extent.
On October 16, former US President Donald Trump launched his World Liberty Financial (WLFI) token. The token's website claims it will allow investors to gain voting rights on future DeFi protocols.
However, after nearly a full day of trading, the token's sales have been lukewarm. As of 10:00 UTC on October 17, the token's website shows that only 848.63 million WLFI (worth $12.7 million based on the pre-sale price) have been sold, with 19.1 billion tokens (worth $287 million) remaining unsold. The first day's sales accounted for only 4.24% of the total sales.
Amount of WLFI tokens sold. Source: World Liberty Financial.
The following five reasons can explain the dismal performance of the token.
Limited Target Buyers
Unlike most token pre-sales that are open to anyone and can be purchased anonymously, only accredited US investors or non-residents can purchase the Trump DeFi token.
When users first visit the website, the system asks them whether they reside in the US and "meet the requirements to be considered an 'accredited investor' as defined in Regulation D of the US Securities Act of 1933", or whether they reside outside the US.
Users who do not fall into either category are not allowed to proceed further on the website.
Buyers cannot obtain the tokens unless they first pass a "Know Your Customer" (KYC) check to verify their identity. It is presumed that those claiming to be US residents must provide an affidavit to prove they are accredited investors to pass this check.
According to Investopedia data, US resident investors can only be considered "accredited" if they have an annual income exceeding $200,000, a net worth exceeding $1 million, or are general partners, executives or directors of the issuer of the unregistered securities.
These standards effectively exclude the vast majority of Americans.
Users can bypass this requirement by clicking "I reside outside the US", but they must then provide proof of residence outside the US to proceed.
In fact, many of Trump's supporters reside in the US and are not accredited investors, which may be the main reason for the token's sluggish sales.
Normally, such requirements are easily circumvented. Crypto users outside the US could purchase the tokens from the website and then sell them to US residents through decentralized exchanges.
US resident buyers would use crypto addresses to identify themselves, making it almost impossible for the government to determine if they are US residents and providing the sellers with a reasonable excuse.
However, this did not happen with Trump's WLFI tokens, as they are non-transferable.
WLFI is Non-Transferable and Non-Tradable
Unlike most cryptocurrencies, WLFI cannot be transferred from one wallet to another. This means accredited investors cannot sell the tokens to non-accredited investors, and anyone outside the US cannot sell them to US residents.
In fact, holders have no way to sell the tokens at all. The only thing they can do is wait for the DeFi protocols to be released, at which point the developers claim holders will be able to vote on proposals affecting those protocols.
The token sale's terms and conditions explicitly state that the tokens cannot be transferred to other users.
WLFI sale terms and conditions. Source: World Liberty Financial.
The inability to sell the tokens means investors cannot profit by selling them at a higher price, and token holders cannot benefit from the upcoming DeFi protocols.
The Website Crashed
Despite only selling a few hundred million tokens, the website was unable to handle even this small amount of traffic. Some users reported receiving a "This page isn't working" message when trying to purchase the tokens.
Source: Wazz
With the website down, some users may have been unable to purchase WLFI, and after considering their plans, they may have changed their minds and decided to keep their money. This could further reduce token sales.
The WLFI team has not yet explained the reason for the website's collapse, but they may have anticipated sales to be worse than originally planned. As a result, they may not have prepared enough servers to handle the website's traffic, leading to the crash and exacerbating the situation.
People Perceive it as a Scam
Another reason for the token's poor sales performance may be the widespread perception that the project is a scam or a small-scale fraud.
Some observers have stated that the lack of transferability is deliberately hidden from buyers to sell more tokens.
Although the token's website clearly states the lack of transferability, some believe the project did not expect buyers to read the fine print.
Trump's announcement of the token launch on X caused a significant controversy, prompting community attention. The explanation noted, "In the fine print, it states the 'tokens' are non-transferable and locked in wallets, so you cannot withdraw the tokens until the 'program' deems fit. Please read the fine print!"
Reflecto Passive Income Token founder Vladimir Djukic shared this information:
Source: Vladimir
The Purchase Process is Cumbersome
Another reason for the token's poor sales performance may be that the purchase process is too frustrating for many potential investors.
Some may not know if they are accredited investors, as they may not even be aware of the meaning of the term.
Others may be unsure what it means to "reside" in the US. For example, if someone spends a few months in the US per year but the rest of the time in another country, they may not be sure which button to click.
Even if they reach the token sale page, they must first pass a KYC check before proceeding to the final purchase step. Some users may not trust the Sumsub company conducting the KYC check and may be unwilling to upload their passports or driver's licenses.
Even if they are willing to trust the company conducting the KYC, they may simply be unwilling to upload their documents.
The overall tedium of the purchase process may be another reason many supporters decided to skip the token sale, even if they believe the tokens will somehow pay off in the long run.
Despite the poor token sale, Trump still enjoys the support of many in the US crypto community. According to Federal Election Commission data, a political action committee allied with Trump raised over $7.5 million in cryptocurrencies from July to September.
According to research by Galaxy Digital, Trump's opponent, Vice President Kamala Harris, is also seen as more crypto-friendly than current President Joe Biden.
She recently tried to attract crypto voters as part of her "Opportunity Economy Agenda" by promising reasonable asset regulation.
