AAVE dropped over 8% on Saturday due to rumors about WLFI token allocation being denied, sparking a debate about the agreement between Aave and World Liberty Financial.
The community proposal from October 2024 previously described Aave DAO receiving 7% of WLFI's circulating supply and 20% of WLFI revenue deployed on Aave v3, but the WLFI side, as relayed by Colin Wu, denies this. AAVE's price fluctuated significantly as DeFi attracted institutional capital.
MAIN CONTENT
AAVE plummeted over 8% due to rumors about WLFI allocation, then slightly recovered; WLFI denied the claim that Aave receives 7% of the supply.
The WLFI community proposal (10/2024) states that Aave DAO will receive 7% of WLFI's circulating supply and 20% of revenue from deployment on Aave v3.
DeFi's TVL exceeds $167 billion, approaching the historical peak of $212 billion (12/2021), with financial institutions increasingly participating (DeFiLlama).
What impact does the rumor about WLFI's allocation have on AAVE?
AAVE's price dropped over 8% on Saturday when rumors surfaced that Aave would receive a different WLFI allocation than expected, before partially recovering. This movement reflects the market's sensitivity to information related to revenue, token allocation, and DeFi alliances.
Specifically, AAVE fell from around $385 to a low of $339, then recovered to about $352 (TradingView). The rapid fluctuations indicate that investors reacted immediately to the risk of changing economic terms, especially when the official source has not confirmed.
What is the specific rumor?
On social media, a claim circulated that Aave will receive 7% of the total WLFI supply. Colin Wu relayed from WLFI that this is 'fake news'. This reaction sparked a wave of debate about the authenticity and terms between the two parties.
Source: Colin Wu's post on X (WuBlockchain) and subsequent community discussion. In similar situations, the market often requires official documentation from the issuer or DAO to end information disruption.
What does WLFI's proposal for October 2024 say?
A proposal on the WLFI forum (10/2024) describes the plan for Aave DAO to receive 7% of the circulating WLFI Token supply and 20% of protocol revenue from deploying WLFI on Aave v3. This is community documentation and not a final confirmation.
Such proposals often require governance processes, voting, and binding agreements before coming into effect. Therefore, the difference between 'community proposal' and 'approved decision' is key in interpreting information.
What was Stani Kulechov's response?
The founder of Aave, Stani Kulechov, called the proposal 'the art of the deal' and implied that the terms are still in effect. However, official statements from both sides had not been published at the time of the original article.
"The art of the deal."
– Stani Kulechov, Founder of Aave, posted on X on Saturday, source: https://x.com/StaniKulechov/status/1959228717563105326
Kulechov's brief but attention-grabbing statement indicates that Aave is seriously considering collaboration. However, the market still requires legal documentation or governance minutes to confirm allocation levels and revenue sharing.
How did AAVE's price fluctuate after the rumor?
AAVE dropped from around $385 to $339 and then recovered around $352 in a day, according to TradingView. The large range indicates mixed expectations and concerns about the economic impact if the WLFI agreement is passed.
In DeFi, any changes in token allocation or revenue sources directly impact the accrued value for the protocol. Investors often re-evaluate immediately when there is a possibility of terms adjustment.
What is WLFI and why is it attracting attention?
World Liberty Financial (WLFI) is a DeFi platform backed by family members of U.S. President Donald Trump, according to the original content. The political connection causes public opinion to closely monitor all agreements with major protocols.
Such links increase the level of scrutiny and debate about governance, transparency, and policy risks. Therefore, all documentation regarding allocation and revenue sharing requires an approval process and clear disclosure.
DeFi is on the rise, but what about the current TVL?
The TVL of DeFi currently exceeds $167 billion and is approaching the peak of over $212 billion in December 2021, according to DeFiLlama. The main driver comes from expectations of a more favorable regulatory environment after the 2024 U.S. elections.
The increase in TVL indicates the demand for using and locking capital into recovering protocols. As capital flows back, any developments related to top-tier protocols like Aave can have a larger spillover effect on the entire market.
Why are financial institutions interested in DeFi?
Banks, asset managers, and financial service firms are increasing their participation in cryptocurrencies and DeFi, as described in the original content. They are seeking capital efficiency, on-chain transparency, and product innovation.
The involvement of institutions helps improve liquidity, but also comes with expectations of compliance and governance. This may impact how protocols design tokenomics, governance mechanisms, and revenue sharing.
What debate arises from institutional capital flow?
The community debates the risk of regulatory tightening on permissionless protocols and the possibility of DeFi being 'held' by Traditional Finance (TradFi). This represents a conflict between decentralization goals and compliance requirements.
If revenue-sharing agreements with institutional partners explode, the benefits model of governance tokens may change significantly. This emphasizes the role of DAOs and transparent voting.
What next steps could occur between Aave and WLFI?
At the time of the original article, Cointelegraph reported that it had contacted WLFI and Aave but had not received a response. Therefore, the next scenario depends on official statements or public governance processes.
In practical DeFi, a standard agreement typically goes through: community proposal, discussion, term updates, DAO voting, and technical deployment. Only when this chain is completed are the new terms considered effective.
Quick comparison: What is the difference between rumors and public documents?
The key point lies in the context: 'rumors' on social media vs. 'community proposals' with specific links and content. Investors should prioritize original documents and await official confirmation.
Rumor aspect on social media Public documents/ sources Allocation for Aave Confirm Aave receives 7% of the total WLFI supply WLFI proposal (10/2024) states Aave DAO receives 7% of WLFI's circulating supply Revenue sharing Unclear 20% of revenue from deploying WLFI on Aave v3 (community proposal) Official response WLFI, as relayed by Colin Wu, denies the claim 'Aave receives 7% of total supply' No statement from WLFI/Aave at the time of the original article; Cointelegraph has reached out Price fluctuation of AAVE Dropped sharply and then slightly recovered $385 → $339 → $352 (TradingView)
Frequently Asked Questions
Does Aave really receive 7% of the total WLFI supply?
The WLFI side, as relayed by Colin Wu, denies the claim that Aave receives 7% of the total supply. The community proposal (10/2024) mentions 7% of circulating supply for Aave DAO, which is not a final decision.
Why did AAVE drop over 8% in a day?
The rumors about WLFI's allocation and the uncertainty of economic terms caused investors to re-evaluate risk, leading to strong selling and then slight recovery. Reference price data from TradingView.
What does the WLFI proposal relate to Aave?
The October 2024 proposal describes Aave DAO receiving 7% of WLFI's circulating supply and 20% of revenue from deploying WLFI on Aave v3. This is a proposal, requiring an approval governance process.
What is the current TVL of DeFi and what does it mean?
Over $167 billion, nearing the peak of $212 billion (12/2021), according to DeFiLlama. This reflects a recovery in capital flow and confidence in the DeFi ecosystem.
Does the participation of financial institutions make DeFi less decentralized?
This is an open debate. Institutional capital increases liquidity but may bring compliance demands and governance impacts. The community often relies on DAO voting to balance this.
Source: https://tintucbitcoin.com/aave-lao-doc-vi-don-world-liberty/
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