World Liberty Financial redirects institutional arbitrage profits toward long-term WLFI token holders.
Unlocked token holders must stake 180 days minimum before casting any governance vote.
Node status requires one million dollars staked to access direct USD1 conversion rights.
When a protocol decides to change who captures the value it generates, the proposal formalizing that decision reveals more about its real priorities than any public statement ever could. World Liberty Financial submitted a governance proposal that does exactly that: take the arbitrage margins that previously enriched institutional intermediaries and redirect them toward participants who lock their capital inside the protocol for extended periods.
The mechanism making that possible is called the WLFI Governance Staking System, and its approval requires a quorum of one billion eligible tokens with a simple majority over a seven-day voting period.
The document opens with an admission that few organizations in the crypto sector make with comparable clarity. During the recent expansion phase of its stablecoin USD1, market makers captured millions of dollars in arbitrage profits running approximately 15 basis points per minting and selling cycle.
At the same time, the protocol itself paid millions in additional subsidies to facilitate redemption processes. In net terms, value flowed out of the protocol toward a small group of intermediaries who assumed minimal risk to earn that return. The proposal frames that flow as a structural problem and presents the new system as the correction.
The first change the proposal introduces affects the voting process directly. Once implemented, holders of unlocked tokens who want to participate in WLFI governance decisionsmust lock their assets for a minimum of 180 days. Holders of tokens already locked under prior conditions keep their voting rights without that additional requirement.
The reasoning behind the distinction is straightforward: political weight inside the protocol should belong to participants who accept long-term commitments, not to those who can enter and exit based on short-term convenience.
Voting power inside the system doesn’t operate linearly. The proposal applies a square root weighting formula that simultaneously accounts for the amount staked and the time remaining in the lock-up period.
Participants who stake and vote at least twice during their lock-up period receive a base reward in WLFI targeting approximately 2% annual yield. Those who stake but don’t vote receive nothing — the design penalizes passive participation explicitly and by construction.
Nodes and Super Nodes: Differentiated Access Based on Capital Committed
The proposal introduces two advanced participation categories that go beyond basic staking. The first, called a Node, requires staking a minimum of 10 million WLFI tokens, equivalent to approximately one million dollars at current prices. The second, Super Node, requires 50 million tokens — around five million dollars.
Nodes access the mechanism that redistributes the arbitrage previously captured by institutional intermediaries. Through partnerships with licensed market makers, Nodes can convert USDT, USDC, or other supported stablecoins toUSD1 at 1:1 parity and access direct off-ramp conversion from USD1 to physical dollars
The protocol subsidizes market makers to maintain that parity, effectively transferring the 10 to 15 basis points per cycle that previously stayed with external institutions toward participants holding active positions inside the system
The protocol reserves the right to modify or eliminate the subsidy at any point. The first 1,000 Nodes also receive additional rewards calculated on USDT-to-USD1 conversion volume, settled every six months.
Super Nodes receive all benefits from the Node tier plus guaranteed direct access to the World Liberty Financial team for commercial partnership discussions. The justification the proposal offers for that requirement is operational: the team receives more partnership inquiries than it can productively engage with
Requiring a five-million-dollar economic commitment as a condition for starting commercial conversations functions as a filter that prioritizes counterparties with genuine alignment over those seeking opportunities without prior commitment. Super Node status guarantees the conversation happens — it doesn’t guarantee any agreement follows.
Implementation, assuming a favorable vote, would proceed across three phases. The first activates basic staking and governance rewards for all unlocked token holders. The second launches the Node structure with market maker agreements already finalized and OTC conversion rights made available to qualifying participants
The third activates Super Nodes alongside the partnership access and potential revenue share framework. Specific timelines between phases will be communicated by the WLFI team after the voting period concludes.
What separates this proposal from conventional governance systems isn’t the existence of participation tiers — layered structures appear frequently in mature DeFi protocols. What distinguishes it is the decision to use those tiers to redistribute a concrete, quantifiable value flow the protocol already generated, rather than manufacturing artificial incentives without real economic backing. The arbitrage in USD1 minting cycles existed before the proposal. The question the proposal answers is who should capture it going forward.
That question carries consequences beyond the direct numbers
A protocol that routes long-term holder rewards from value that previously leaked toward external intermediaries creates a concrete economic reason to hold positions rather than rotate capital into competing opportunities
If the mechanism performs as described, the outcome wouldn’t just be a more stable holder base — it would generate structural demand pressure on USD1 that no marketing campaign could produce with equivalent efficiency or durability.
The proposal asks token holders to decide whether that redistribution is worth the governance constraints it attaches. Staking for 180 days to vote, accepting non-transferable governance rights, and committing one or five million dollars to access the highest-tier benefits are real costs.
World Liberty Financial Proposes a Tiered Governance System That Redirects Millions in Arbitrage Back to Its Own Token Holders - Crypto Economy
Puntos claves de la noticia:
When a protocol decides to change who captures the value it generates, the proposal formalizing that decision reveals more about its real priorities than any public statement ever could. World Liberty Financial submitted a governance proposal that does exactly that: take the arbitrage margins that previously enriched institutional intermediaries and redirect them toward participants who lock their capital inside the protocol for extended periods.
The mechanism making that possible is called the WLFI Governance Staking System, and its approval requires a quorum of one billion eligible tokens with a simple majority over a seven-day voting period.
The document opens with an admission that few organizations in the crypto sector make with comparable clarity. During the recent expansion phase of its stablecoin USD1, market makers captured millions of dollars in arbitrage profits running approximately 15 basis points per minting and selling cycle.
At the same time, the protocol itself paid millions in additional subsidies to facilitate redemption processes. In net terms, value flowed out of the protocol toward a small group of intermediaries who assumed minimal risk to earn that return. The proposal frames that flow as a structural problem and presents the new system as the correction.
The first change the proposal introduces affects the voting process directly. Once implemented, holders of unlocked tokens who want to participate in WLFI governance decisions must lock their assets for a minimum of 180 days. Holders of tokens already locked under prior conditions keep their voting rights without that additional requirement.
The reasoning behind the distinction is straightforward: political weight inside the protocol should belong to participants who accept long-term commitments, not to those who can enter and exit based on short-term convenience.
Voting power inside the system doesn’t operate linearly. The proposal applies a square root weighting formula that simultaneously accounts for the amount staked and the time remaining in the lock-up period.
Participants who stake and vote at least twice during their lock-up period receive a base reward in WLFI targeting approximately 2% annual yield. Those who stake but don’t vote receive nothing — the design penalizes passive participation explicitly and by construction.
Nodes and Super Nodes: Differentiated Access Based on Capital Committed
The proposal introduces two advanced participation categories that go beyond basic staking. The first, called a Node, requires staking a minimum of 10 million WLFI tokens, equivalent to approximately one million dollars at current prices. The second, Super Node, requires 50 million tokens — around five million dollars.
Nodes access the mechanism that redistributes the arbitrage previously captured by institutional intermediaries. Through partnerships with licensed market makers, Nodes can convert USDT, USDC, or other supported stablecoins to USD1 at 1:1 parity and access direct off-ramp conversion from USD1 to physical dollars
The protocol subsidizes market makers to maintain that parity, effectively transferring the 10 to 15 basis points per cycle that previously stayed with external institutions toward participants holding active positions inside the system
The protocol reserves the right to modify or eliminate the subsidy at any point. The first 1,000 Nodes also receive additional rewards calculated on USDT-to-USD1 conversion volume, settled every six months.
Super Nodes receive all benefits from the Node tier plus guaranteed direct access to the World Liberty Financial team for commercial partnership discussions. The justification the proposal offers for that requirement is operational: the team receives more partnership inquiries than it can productively engage with
Requiring a five-million-dollar economic commitment as a condition for starting commercial conversations functions as a filter that prioritizes counterparties with genuine alignment over those seeking opportunities without prior commitment. Super Node status guarantees the conversation happens — it doesn’t guarantee any agreement follows.
Implementation, assuming a favorable vote, would proceed across three phases. The first activates basic staking and governance rewards for all unlocked token holders. The second launches the Node structure with market maker agreements already finalized and OTC conversion rights made available to qualifying participants
The third activates Super Nodes alongside the partnership access and potential revenue share framework. Specific timelines between phases will be communicated by the WLFI team after the voting period concludes.
What separates this proposal from conventional governance systems isn’t the existence of participation tiers — layered structures appear frequently in mature DeFi protocols. What distinguishes it is the decision to use those tiers to redistribute a concrete, quantifiable value flow the protocol already generated, rather than manufacturing artificial incentives without real economic backing. The arbitrage in USD1 minting cycles existed before the proposal. The question the proposal answers is who should capture it going forward.
That question carries consequences beyond the direct numbers
A protocol that routes long-term holder rewards from value that previously leaked toward external intermediaries creates a concrete economic reason to hold positions rather than rotate capital into competing opportunities
If the mechanism performs as described, the outcome wouldn’t just be a more stable holder base — it would generate structural demand pressure on USD1 that no marketing campaign could produce with equivalent efficiency or durability.
The proposal asks token holders to decide whether that redistribution is worth the governance constraints it attaches. Staking for 180 days to vote, accepting non-transferable governance rights, and committing one or five million dollars to access the highest-tier benefits are real costs.