David Canellis

This is a segment from the Empire newsletter. To read full editions, <a href="https://blockworks.co/newsletter/empire">subscribe</a>.



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Here’s the thing about strategic reserves.



The name implies that whatever is in the reserve is a stockpile that can be utilized at some point in the future when the situation calls for it.



In the US, the government maintains a <a href="https://www.energy.gov/ceser/northeast-home-heating-oil-reserve">stockpile</a> of one million barrels of diesel fuel spread between Massachusetts, New Jersey and Connecticut — a trove of oil to be released to heat homes and businesses should there be a supply disruption somewhere down the line.&nbsp;



A strategic grain reserve does much the same thing, but for a critical food ingredient.



They do not necessarily have to directly benefit the general public, either. At one point, the government was also stockpiling helium, <a href="https://www.cfr.org/backgrounder/state-us-strategic-stockpiles">hoarding</a> it for use in military blimps, although these days the private sector handles that, and the helium instead is used for rockets and superconductors.



So what would a strategic crypto reserve actually be for? What future calamity could a portfolio of random coins help alleviate?



A bitcoin-only strategic reserve is the easiest to square. As far as coins go, it’s obviously the most resistant to major long-term corrections — it has always bounced back from its semi-regular 80% drawdowns.



BTC is also effectively uncorrelated with the rest of the crypto market — because it almost always leads it. That makes it the obvious choice for a strategic reserve.&nbsp;



After all, bitcoin’s primary modern use case is buying and holding long-term, which is about as close to an overarching goal for any strategic reserve as we’ve got right now. Maybe one day in the future, on some rainy day, the US could sell its bitcoin something, pay off some debt or otherwise fund initiatives for the common good.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcHjx1_-Z4PWn9T20BR3HIjnpjZWLRruCdnng5au0MQFGH1x4vEYuIOOiuvkBG2J9PfMPhW57RHCRpimfuLJYpAyXnlMQxiDrLBkUQh8DmoO3qcBKaXqcdhC12AAQfj7qjjB9B5UQ?key=JOAUs5lZRL4PgoRC0B8h7JAu" alt=""/></figure>



As it stands, the nearest things we have to a US strategic crypto reserve are the $20 billion BTC seized through criminal cases over the years — which is still on track to be liquidated at some point, although perhaps not in the short term.



Then, there’s the growing strategic reserve maintained by Trump’s upcoming DeFi project World Liberty Fi. It’s so far spent $303 million on seven different coins since the end of November, as recently as last week, with nearly two-thirds of it going to ETH.&nbsp;



Tracking the value of World Liberty Fi’s reserve is more difficult after it moved most of it into Coinbase Prime custody earlier this month. But after piecing together the onchain data, I calculated that the portfolio was worth just over $261 million earlier this morning.



That puts it in the red by about 14% on all of its purchases to date (as shown by the blue line on the chart above, while the other lines show the overall performance of each position).&nbsp;



TRX is the only hold still green, but only barely, with ENA the worst — World Liberty Fi is down around $2.7 million on its ENA positions right now. The portfolio is largely being held up by bitcoin, with it down around $30 million in its ETH compared to $5 million on BTC.



Perhaps there’s no reason for World Liberty Fi’s strategic reserve to exist at all, other than basic treasury management common to many crypto projects, not to mention the <a href="https://blockworks.co/news/trump-backed-project-token-swaps">reported token swap deals</a> relayed by Lightspeed’s Jack Kubinec.



But if it really turns out that World Liberty Fi’s crypto portfolio is in fact Trump’s <a href="https://blockworks.co/news/trump-strategic-crypto-reserve">anticipated strategic reserve</a>, then it will need to be actively managed, especially as we get closer to the next bear market.



If World Liberty Fi’s portfolio drops further, labeling it as “strategic” could get embarrassing.



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<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Start your day with top crypto insights from David Canellis and Katherine Ross.</li>



<li><a href="https://blockworks.co/newsletter/onthemargin">Forward Guidance</a>: Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin.</li>



<li><a href="https://blockworks.co/newsletter/research">0xResearch</a>: Get alpha directly in your inbox — market highlights, charts, degen trade ideas, governance updates, and more.</li>



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<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: The newsletter for crypto collectors and traders, covering games, tokens, apps, memes and more.</li>
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Why a US crypto strategic reserve would need active management

Jack Kubinec

World Liberty Financial, the crypto platform backed by President Donald Trump, has been courting blockchains to take part in “token swap” deals, two sources with knowledge of the matter told Blockworks.



Representatives for World Liberty Financial have been approaching blockchain teams with an offer: buy at least $10 million worth of unlaunched WLFI tokens with a 10 percent fee, and World Liberty Financial will buy the same amount of the blockchain’s native token.&nbsp;



A message from a World Liberty Financial representative shared with Blockworks said the WLFI tokens would be transferred at a $1.5 billion fully diluted valuation, which is crypto verbiage for the theoretical total value of a given crypto token.&nbsp;



The World Liberty Financial platform is expected to launch in Q3 of this year at a $1.5 billion FDV, the representative’s message said. The message insisted that none of the tokens could be subject to a vesting period, and the minimum buy in for a token swap partnership was set at $10 million.&nbsp;



A source at a second blockchain project, granted anonymity to discuss private business dealings, confirmed to Blockworks that they had received the same offer with the caveat that while $10 million was the minimum buy in, it would take $15 million to receive priority treatment from World Liberty Financial.



World Liberty Financial will aim to help users access third-party DeFi applications to do things like earn yield on stablecoins or borrow cryptoassets, according to the project’s official documentation. President Trump <a href="https://blockworks.co/news/on-the-margin-newsletter-trump-family-defi-venture">began promoting</a> the project while still on the campaign trail last year.&nbsp;



Right now, the only thing users can do on World Liberty Financial’s website is buy the forthcoming WLFI token. According to the website, roughly 24 billion WLFI tokens have been sold at $0.05 apiece, which would total some $1.2 billion.&nbsp;



Chinese crypto entrepreneur Justin Sun <a href="https://x.com/justinsuntron/status/1881169556506546485">claimed</a> that TronDAO has snapped up $75 million.



Only President Trump’s son Eric, who is on the project’s “board of managers,” is directly involved with World Liberty Financial, but the Trump family has financial upside nonetheless.&nbsp;



An LLC affiliated with President Trump and his family is entitled to 60% of the project’s equity, 75% of the fee revenue generated by the WLFI token sale, and 22.5 billion WLFI tokens, worth some $1.1 billion at the public sale price.&nbsp;



World Liberty Financial’s crypto wallet is public. ETH accounts for about half of the project’s $378 million in crypto, data from Arkham <a href="https://intel.arkm.com/explorer/entity/worldlibertyfi">shows</a>. The rest of the holdings include Justin Sun-linked wrapped bitcoin, staked ether, and USDC, as well as a smattering of smaller tokens.&nbsp;



Scoring a spot on World Liberty Financial’s balance sheet has become a point of pride for crypto projects.



“[We] would like to thank @worldlibertyfi for their continued support and look forward to an [American] future for MOVE,” Movement Labs co-founder Rushi Manche wrote on X after World Liberty Financial acquired $2 million in its native token.



“Movement has not purchased any WLFI tokens or engaged with WLF,” a Movement Labs spokesperson told Blockworks.



The message shared with Blockworks says token swap candidates will participate in an initial meeting followed by a video meeting with World Liberty Financial co-founder Zak Folkman to finalize the deal.&nbsp;



Folkman and fellow World Liberty Financial co-founder Chase Herro previously built Dough Finance, a crypto platform that was hacked for $2 million in July 2024, CoinDesk previously <a href="https://www.coindesk.com/business/2024/09/03/inside-the-trump-crypto-project-linked-to-a-2m-defi-hack-and-former-pick-up-artist">reported</a>. The pair launched World Liberty Financial alongside real estate magnate and Trump associate Steve Witkoff.



Folkman, Herro and World Liberty Financial did not return direct messages sent to multiple social media accounts seeking comment.



World Liberty Financial’s token swap deal is currently running on a “first come first serve” basis, the message notes, although the Trump-backed platform is “prioritizing projects with the strongest technical metrics, mindshare, [and] willingness to do larger tickets than USD $10M.”



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<ul class="wp-block-list">
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<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Start your day with top crypto insights from David Canellis and Katherine Ross.</li>



<li><a href="https://blockworks.co/newsletter/onthemargin">Forward Guidance</a>: Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin.</li>



<li><a href="https://blockworks.co/newsletter/research">0xResearch</a>: Get alpha directly in your inbox — market highlights, charts, degen trade ideas, governance updates, and more.</li>



<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: All things Solana, in your inbox, every day from Jack Kubinec and Jeff Albus.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: The newsletter for crypto collectors and traders, covering games, tokens, apps, memes and more.</li>
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Trump-backed World Liberty Financial courts crypto teams for token swaps

This is a segment from the Empire newsletter. To read full editions, <a href="https://blockworks.co/newsletter/empire">subscribe</a>.



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At face value, President Trump is well on his way to giving crypto what it wants.&nbsp;



A US government strategic crypto reserve. Or maybe it’s a <a href="https://www.cnbc.com/2025/01/23/trump-signs-executive-order-on-crypto-digital-asset-stockpile.html">stockpile</a>. Is there a difference?



Anyone interested in wading into that debate is well <a href="https://x.com/search?q=stockpile%20crypto&amp;src=typed_query">covered</a> on X and so on.&nbsp;



Same goes for those keen to moralize the implications of US government agencies accumulating coins other than bitcoin — perhaps even ones backed by funds and entities controlled by appointed officials like venture capitalist <a href="https://blockworks.co/news/trump-picks-crypto-czar">David Sacks</a>.



I’m taking a different path. Let’s put aside the US strategic stockpile. It doesn’t exist, yet.



What does verifiably exist onchain is the growing crypto portfolio of <a href="https://blockworks.co/news/world-liberty-financial-kyc-starts">World Liberty Fi</a>, the DeFi project endorsed by the Trump family.&nbsp;



And because this is crypto — and it&#8217;s on Ethereum — we know exactly what it’s doing at all times, and whether it’s underwater or not.



I touched on this <a href="https://blockworks.co/news/trump-strategic-crypto-reserve">earlier this week</a>, but World Liberty Fi has bought more crypto since Trump’s inauguration on Monday.&nbsp;



The chart below treats World Liberty Fi’s stockpile as a fund. Its performance is plotted by the blue line.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdU2hFDWlJ_IL64ZoIYeHIDpjpV6MviJskU6hom-nlRgGkxWvfOIOelF4mTSZcOShafjztA38OAuQuLPugSyGrz02X21vI8GVJLVKsUJvnC340tzO3hnX6ixGDU89MnjkddXOKB?key=r7UJwDSxvmuP7JeyAN-Z78QO" alt=""/><figcaption class="wp-element-caption">The crypto World Liberty Fi used to buy more coins came from its $300-million token <a href="https://dune.com/seoul/wlfi">sale</a>. It currently holds a combined ~$53 million in USDT and USDT.</figcaption></figure>



When the blue line goes into the red, World Liberty Fi’s accumulated portfolio is underwater. It’s otherwise ahead on its purchased crypto to date when it&#8217;s in the green area.&nbsp;



The portfolio is ahead by 4.3%, as of this morning, although there would be additional small gains related to liquid ETH staking which were not included in the analysis.



Most recently, World Liberty Fi spent $22.5 million on Thursday, on a mixture of ETH, TRX and wrapped BTC. That’s on top of the $2.65 million in TRX bought on Tuesday.



Those purchases brought World Liberty Fi total spend to $245.3 million across six different coins since it began at the end of November: the three above as well as LINK, ONDO, AAVE and ENA, a set which should integrate with the platform in some capacity in the future.



As you can see, the portfolio, now worth nearly $259 million, has spent about half the time ahead. That makes sense, considering it’s regularly accumulating crypto (although with no real stated goal for what it will be for as yet, other than for strategic purposes).



Sure, handwringing about how all this could go wrong is probably justified. Especially if World Liberty Fi’s portfolio indeed turns out to be Trump’s strategic crypto reserve.



It’s worth appreciating, however, that the very blockchain rails on which the stockpile exists make those concerns much easier to navigate. We can see what it’s doing. We can see when it buys, sells, stakes or otherwise transfers any of the coins it holds. And they will be forever trackable, at least within the current capabilities of analytics software.



The tools for everything to go right are there. We’ll just need to actually use them to make sure that it does.



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<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/daily">Blockworks Daily</a>: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.</li>



<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Start your day with top crypto insights from David Canellis and Katherine Ross.</li>



<li><a href="https://blockworks.co/newsletter/onthemargin">Forward Guidance</a>: Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin.</li>



<li><a href="https://blockworks.co/newsletter/research">0xResearch</a>: Get alpha directly in your inbox — market highlights, charts, degen trade ideas, governance updates, and more.</li>



<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: All things Solana, in your inbox, every day from Jack Kubinec and Jeff Albus.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: The newsletter for crypto collectors and traders, covering games, tokens, apps, memes and more.</li>
</ul>