7% token distribution is a mystery: WLFI and Aave cooperation proposal traps "Rashomon"

Original author: 1912212.eth, Foresight News

Cooperation" in the Crypto field is the norm, and "conflict" is no exception. This incident, stemming from a seemingly mutually beneficial DeFi collaboration proposal, caused an uproar due to information asymmetry and denial statements, causing the AAVE token price to drop by more than 8% in the short term.

WLFI, as an open finance project endorsed by the Trump family, originally intended to expand its influence through Aave's DeFi infrastructure, but the dispute has exposed the pain points of governance transparency in the crypto ecosystem.

The token sharing proposal came to naught?

The WLFI project was launched in 2024 and is facilitated by members of the Trump family. With a total token supply of 100 billion, WLFI has previously sought partnerships with established DeFi protocols to boost liquidity as an emerging project.

Previously, Aave DAO (Decentralized Autonomous Organization) passed a proposal: WLFI will deploy its platform on Aave V 3. In return, Aave DAO will receive a 20% fee share generated by the WLFI protocol and allocate approximately 7% of the total WLFI supply (i.e., 7 billion tokens).

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this clause was initially seen as a positive – Aave, as a leading lending protocol, can inject new assets to boost TVL, while WLFI accelerates adoption with Aave's user base.

On August 23, Aave founder Stani.eth responded to the question "Are WLFI and AAVE agreements still valid? Are they really building on Aave? There are many different rumors from the outside world", saying that the agreement is still valid, and forwarded the view that "at the current price, Aave Treasury will receive $2.5 billion worth of WLFI, making it one of the biggest winners in this cycle", calling this the art of trading, and then AAVE pulled up to $385.

However, soon after, suspected WLFI Wallet team member Dylan_0 x (@0 xDylan_) posted a message denying the proposal that "Aave will receive 7% of the total WLFI tokens", and AAVE fell 5%

On August 24, the WLFI team denied the authenticity of the "7% token allocation" to Wu Shuo Blockchain, calling it "fake news." WLFI officials stated that although the proposal exists, the allocation terms are not true, and emphasized that the project focuses on tokenized innovation rather than external components.

Aave founder Stani.eth responded under his tweet that the proposal created by the WLFI team had been voted on and passed on the Aave DAO, approved by WLFI, and attached a link to the proposal.

So far, WLFI's official account has not officially responded to this matter, which has also led to different opinions in its market.

WLFI will soon go live on Ethereum on September 1 and will be open for claim and trading. Early supporters ($0.015 and $0.05 rounds) will unlock 20%, with the remaining 80% being voted on by the community. Tokens for the founding team, advisors, and partners will not be unlocked.

On September 25, according to Bitget's market, its pre-market price was $0.45 at one point, making its FDV (fully diluted valuation) as high as tens of billions of dollars, and now it has fallen back to $0.25. AAVE fell back below $350.

Does governance count?

The DAO governance problem has continued from the last cycle to the present.

Stani.eth, the founder of Aave, responded that the proposal is still valid and may just be one-sided wishful thinking.

dForce founder Mindao commented on the matter, saying that the proposal "looks like it was written by a WLFI intern, and it doesn't look like a deal signed by the Trump family at all. Aave and Spark's partnership only gives a 10% revenue share. WLFI has the blessing of the Trump brand, and it is reasonable to say that Aave has to pay a little more consideration. Even if WLFI was for the public offering at that time, it would not have come up with such bad terms. Later, the Crypto New Deal took off, WLFI issued USD 1, and the narrative jumped directly from "crypto bank" to "Aave + Circle", with a valuation of 10x, after all, Trump wrote the Art of the Deal, and this deal is absolutely humiliating."

In addition, Mindao speculated that the follow-up script "WLFI completely abandoned aave, so that the previous contract would naturally be invalidated. Massively reduce the share of token distribution. The allocation is used to incentivize USD 1 lending and minting, and the left hand and right hand do not suffer, so it is regarded as a targeted stablecoin minting operation subsidy."

Twitter KOL Laolu said that there is no need to be surprised if WLFI does not plan to give AAVE 7% of the tokens, "SPK defaulted on 10% and only gave 1% of the gain, and in the end it was gone. WLFI said it was well unlocked during the public offering, but now it has been changed to partial unlocking."

Polygon and Aave have staged similar plots

December 2024, a conflict broke out between Polygon and Aave due to a proposal by the Polygon community: to use bridge funds (approximately US$110 million) for yield strategies, such as staking yields.

Aave contributor Marc Zeller objected, calling it a "risky strategy" and suggesting that Aave drop Polygon support to prevent misuse of funds. Aave even adjusted the parameters of the Polygon lending platform to set the LTV to 0, meaning that no amount of deposits can be borrowed.

Polygon founder Sandeep Nailwal accused Aave of "monopolistic behavior" and "sour grape mentality," arguing that Aave is trying to suppress competition and maintain its hegemony in the lending market.

The conflict escalated into private message threats and public accusations, with Polygon CEO Marc Boiron and Zeller even betting that if Aave exits Polygon, the latter will prove its independence.

Eventually, the proposal was adjusted, and Aave did not withdraw completely, but the relationship was tense. Polygon has shifted to developing dual-token systems (POL and MATIC), enhancing autonomy.

It is worth mentioning that in April 2021, Polygon (with a market capitalization of about 4 billion) took out a 1% MATIC incentive worth $40 million to incentivize Aave (with a market capitalization of about 6.5 billion at the time).