Aave tumbles following rumors regarding World Liberty token allocation

The price of the Aave () token tumbled by over 8% on Saturday, following rumors that the decentralized finance (DeFi) protocol would receive a different token allocation from World Liberty Financial (WLFI), a DeFi platform backed by members of US president Donald Trump’s family.

“The WLFI team told WuBlockchain that the claim that ‘Aave will receive 7% of the total WLFI token supply’ is false and fake news,” blockchain reporter Colin Wu , sparking a debate about the rumor and the token arrangement on social media.

Wu was referencing a WLFI community from October 2024, in which the Aave decentralized autonomous organization (DAO), responsible for governing the protocol, would receive 7% of the WLFI governance token’s circulating supply and 20% of protocol revenues generated by the WLFI deployment on Aave v3.

Aave founder Stani Kulechov the proposal “the art of the deal” on Saturday, and, in a separate post, the terms of the proposal were still valid. Following the rumors, Aave’s token fell from about $385 to a low of $339 before rebounding to about $352. 

Cointelegraph reached out to and Aave spokespeople but did not receive a response by the time of publication.

Rumors regarding the arrangement between Aave and World Liberty come amid a renewed interest in DeFi and in the crypto niche.

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The total value locked (TVL) in DeFi protocols is currently over $167 billion, to DeFiLlama, and is approaching the all-time high of over $212 billion from December 2021.

DeFi TVL rose sharply following the results of the 2024 US elections in anticipation of a friendlier regulatory climate for cryptocurrencies in the country.

Institutional investors, including banks, asset managers, corporations, and financial services companies, have become increasingly , shaping many of the narratives during the current market cycle.

This involvement has fueled a debate among the crypto community about on permissionless protocols and the potential capture of DeFi by traditional financial institutions.

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