A recently approved governance decision tied to the expansion of the USD1 stablecoin has become a flashpoint, exposing deep divisions between large insiders and ordinary tokenholders.
Key Takeaways
- •WLFI’s latest governance vote was decided by a small group of large wallets.
- •Many tokenholders remain unable to vote due to locked tokens.
- •Critics question dilution and lack of direct holder benefits.
- •Expansion plans continue despite governance concerns.
Rather than celebrating the proposal’s passage, much of the community is focused on how it passed. Blockchain data reviewed by independent researchers shows that voting influence was heavily concentrated among a handful of large wallets. In practice, fewer than ten addresses were enough to determine the outcome, leaving little room for meaningful participation from the wider WLFI holder base.
Governance in Name, Control in Practice
At the core of the criticism is the imbalance between unlocked and locked tokens. Since the token generation event, many WLFI holders have been unable to move or use their tokens, including for governance. These investors have no mechanism to vote on unlocking schedules and remain dependent on decisions made by the same group that already dominates voting power.
Meanwhile, wallets linked to insiders or strategic partners were fully able to participate and collectively carried decisive weight. One address alone represented a sizable share of total voting power, reinforcing the perception that governance outcomes are effectively predetermined.
This dynamic has led critics to argue that the vote functioned more as internal approval than community decision-making. For a project that presents itself as decentralized, the optics have proven damaging.
Why USD1 Became the Breaking Point
The content of the proposal added fuel to the backlash. The measure focused on accelerating growth and incentives around USD1, World Liberty Financial’s stablecoin. While expansion initiatives are common in crypto projects, many WLFI holders questioned why governance was used for this purpose while fundamental issues – such as voting access and token utility – remain unresolved.
Concerns intensified after attention returned to the project’s own documentation. According to critics, WLFI tokens do not provide holders with any claim on protocol revenue. Instead, income is allocated to entities associated with the project’s founders and partners. That structure has left some investors asking what tangible benefit governance participation offers them at all.
Several dissenting voices argued that further expansion risks diluting WLFI holders without compensation, especially when the project already controls a large treasury built using investor funds. From their perspective, alternative funding strategies could have been explored without weakening holder positions.
Silence From the Project, Momentum Elsewhere
So far, World Liberty Financial has not publicly responded to the governance controversy. The lack of comment has only amplified frustration, as community members look for clarity on whether locked holders will ever gain a meaningful voice.
Despite the internal unrest, the project is pressing ahead with broader ambitions. World Liberty Financial recently applied for a US national trust banking charter, a move aimed at bringing USD1 issuance and custody under a single regulated framework. It has also launched World Liberty Markets, an onchain lending and borrowing platform built around USD1 and WLFI.
For supporters, these steps signal long-term vision. For critics, they highlight a growing disconnect between rapid expansion and unresolved governance concerns. Whether World Liberty Financial addresses the imbalance at the heart of its decision-making may prove just as important as how quickly USD1 grows.