WLFI Subsidies Propel USD1 to $4.2B, Challenging USDT Dominance

Woofun AI reports that USD1 has ascended to the position of the fourth-largest stablecoin globally, a status achieved through the aggressive dual-token mechanics of World Liberty Financial, a project linked to Trump’s family. The rise of this asset, monitored by analysts including Sea, Bitou, and @DRbitcoin36, represents a structural shift in market share, challenging the entrenched dominance of legacy issuers through a combination of high-yield incentives and strategic exchange partnerships.

The current market hierarchy places USD1 at a market capitalization of USD4.2 billion, securing its rank behind USDT, which commands USD183.8 billion, and USDC, holding USD73.5 billion. It also surpasses the combined value of USDS and DAI, which stands at USD11.5 billion. This trajectory marks USD1 as the fastest-growing stablecoin over the past year. The initial scale of the project was modest, with circulation remaining below USD200 million as late as April.

However, the integration with Binance served as the critical catalyst, transforming a niche asset into a major market player within a compressed timeline.

Phase 1 of the expansion began with the establishment of World Liberty Financial as a DeFi protocol in September 2024. Governance tokens, known as WLFI, were sold to investors starting in October. The stablecoin USD1 was subsequently introduced in March 2025, initially deployed on Ethereum and BNB Chain. Market attention remained sparse during the first two months, but a pivotal shift occurred in May 2025. Abu Dhabi’s sovereign fund MGX invested USD2 billion in Binance, utilizing USD1 for the transaction. This single event pushed the issuance volume past the USD2 billion mark, solving the cold start problem.

Concurrently, Binance listed USD1 trading pairs, embedding the asset into the exchange’s core liquidity infrastructure.

Phase 2 focused on ecosystem expansion and multi-chain deployment throughout the second half of 2025. USD1 was integrated into spot, perpetual, and stock RWA assets on Binance, alongside on-chain DeFi services. In June, WLFI presale participants received USD1 airdrops, while PancakeSwap partnered to promote trading on DEX platforms. Binance expanded its offering by listing pairs for BNB, ETH, SOL, and Pepe against USD1, followed by the addition of perpetual contracts. Beyond Ethereum and BNB Chain, USD1 was deployed on eight other public chains, including SOL, Aptos, Tron, Monad, Plume, and Tempo.

Notably, over USD1 billion was allocated to SOL alone.

Further integrations in Phase 2 included Binance allowing USD1 participation in Launchpool new coin offerings and incorporating it into its reserve proof system in March. Aster enabled USD1 as collateral, rewarding traders with 2.5 million WLFI tokens monthly, and later designated USD1 as the sole settlement stablecoin for all TradFi perpetual contracts. High-yield campaigns were launched on the Monad chain, coinciding with the AI boom through the introduction of the Agentic SDK and WorldClaw projects, along with a lending market. WLFI Markets sponsored UFC Freedom 250, the world’s largest mixed martial arts event, and collaborated with Byreal in the Solana ecosystem to offer 1 million WLFI tokens for trading competitions. An application was submitted to the OCC for a national trust bank license, and integration with Binance Pay enabled real-world usage, such as purchasing Apple gift cards.

The strategic goals of these initiatives were clear: increase awareness of the Trump family-backed asset, encourage holding through yield generation across multiple chains, and drive utility via exchange listings. These efforts resulted in an organic growth process that pushed the issuance volume beyond USD3 billion. The expansion was not merely technical but deeply marketing-driven, leveraging high-profile partnerships and tangible utility to convert speculative interest into sustained circulation. This phase established the foundational liquidity and user base required for the subsequent subsidy campaigns.

Phase 3 commenced in December 2025 with a high-yield campaign on Binance. Users depositing up to 50,000 USD1 in wealth management products received an annualized yield of 20%. This initial success prompted the WLFI team to intensify efforts, launching a series of subsidy rounds from January through August. Over half a year, seven rounds distributed a total of over USD126 million in $WLFI. The first round (1/23 – 2/20) offered 40 million dollars worth of WLFI at a 15% yield. The second round (2/20 – 3/20) distributed 235 million WLFI tokens, valued at USD27 million, with a 13% yield. The third round (3/20 – 4/17) provided 135 million WLFI tokens, worth USD12 million, at an 8% yield.

The subsidy structure continued to evolve in subsequent rounds. The fourth round (4/17 – 5/15) allocated 15 million dollars worth of WLFI at a 7% yield. The fifth round (5/15 – 6/12) offered 13 million dollars worth of WLFI at 5.9%. The sixth round (6/12 – 7/10) distributed 178 million WLFI tokens, valued at USD10 million, with a 5.6% yield. The seventh round (7/10 – 8/7) provided 165 million WLFI tokens, worth USD9.6 million, at a 5.3% yield. If an investor held 100,000 USD1 from January 23, 2026, to August 7, 2026, they would accumulate 104,470 USD1, achieving an average annualized yield of 8.32% over six and a half months. This consistent return structure was designed to lock in capital and reduce volatility.

Woofun AI data shows that these campaigns did not impose limits on individual holdings, allowing large investors and institutions to participate alongside retail users. This inclusivity made USD1 the most popular stablecoin among retail investors during the 2026 bear market. Although yields declined from 20% to 15%, then to 8%, and finally below 6%, they remained significantly higher than the less than 1% offered by traditional banks and carried lower risk than on-chain DeFi protocols. Similar campaigns were launched on Bybit, Gate, and MEXC, with APY rates reaching 20%. This broad exchange support ensured that USD1 remained competitive across multiple trading venues, reinforcing its liquidity depth and user retention.

Financially, the strategy proved viable. By the beginning of the year, USD1 issuance exceeded USD5 billion, driving significant revenue for World Liberty Financial. The protocol ranked 9th in 30-day revenue with USD11.49 million and generated USD115 million over the past 12 months, according to DefiLlama. USD1 became the primary income source, second only to WLFI token sales from September 2024. The model mirrors the red envelope subsidy strategies of Meituan and Didi, where WLFI acts as the 'Growth Token.' While this suppresses WLFI’s price through continuous distribution, it is financially sustainable as long as subsidy costs remain below the present value of reserves generated. Retail investors effectively mined, withdrew, and sold WLFI, creating a disguised asset liquidation mechanism that fueled stablecoin growth.

The GENIUS Act prohibits stablecoin issuers from paying interest, making the WLFI-USD1 dual-currency model a compliant workaround. By subsidizing WLFI to boost USD1 issuance, the project adopts a strategy akin to 'encircling the cities from the countryside,' competing with USDT and USDC through aggressive circulation tactics. The absence of Binance from the Open USD alliance, which includes OKX and Coinbase, underscores the deep integration between Binance and USD1. As crypto and traditional finance merge, stablecoins will remain a critical battleground. With low marginal operating costs and stable earnings, the competition will intensify, and this subsidy-driven model sets a new precedent for future market dynamics.