Trump-linked cryptocurrency project expands stablecoin utility by allowing holders to earn rewards while securing blockchain applications
World Liberty Financial (WLFI), the cryptocurrency venture backed by former President Donald Trump, has announced a groundbreaking partnership with Kernel DAO that allows its USD1 stablecoin to be used for restaking. This development marks the first time USD1 holders can earn passive rewards while contributing to the security of decentralized applications across blockchain networks.
What Is This New Partnership About?
The integration between WLFI and Kernel DAO represents a significant step forward in stablecoin utility. Unlike traditional stablecoins that simply sit in digital wallets, USD1 can now be “restaked” on Kernel DAO’s platform to serve multiple purposes simultaneously.
When users restake their USD1 tokens, they contribute to the economic security of third-party applications built on Kernel’s infrastructure. In return, they receive Kernel points as rewards, creating what the companies call a “dual benefit” system – passive income generation plus participation in decentralized network security.
This is the first collaboration of its kind, according to WLFI’s announcement on May 28, 2025. The partnership allows stablecoin holders to put their assets to work in meaningful ways rather than leaving them idle in wallets.
How Does Restaking Work?
Restaking is a relatively new concept in decentralized finance (DeFi) that allows crypto holders to use their assets to secure multiple blockchain protocols simultaneously. Here’s how it works with USD1:
- Deposit: Users deposit their USD1 stablecoins into Kernel DAO’s restaking platform
- Security: The restaked USD1 helps provide economic security to various decentralized applications
- Rewards: Users earn Kernel points as compensation for their participation
- Flexibility: The USD1 maintains its stable value while generating additional returns
Big news!@kernel_dao X @worldlibertyfi partnership brings USD1 to Kernel as a restakeable asset!
This is the first time USD1 can be used to provide economic security to third-party applications.
Let’s dive in 👇 pic.twitter.com/RguT1WDxAV
— KernelDAO (@kernel_dao) May 28, 2025
Kernel DAO focuses on modular blockchain security and previously relied on assets like Ethereum (ETH) for validation. The addition of USD1 brings stablecoin liquidity into this validation mechanism, expanding Kernel’s capacity to secure more applications while offering users a low-risk way to earn rewards.
Why This Matters for USD1
USD1 has rapidly gained prominence since its launch in March 2025. The stablecoin, backed by U.S. Treasury securities, has achieved a market capitalization of over $2.1 billion, making it the fifth-largest dollar-pegged token in the cryptocurrency market. It trails only behind established giants like Tether (USDT), USD Coin (USDC), Dai (DAI), and Ethena USDe.
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The Kernel DAO integration represents a strategic shift for WLFI beyond its political associations. By providing real DeFi functionality, USD1 is positioning itself as more than just a politically-branded cryptocurrency. The stablecoin can now offer both stability and yield generation, addressing growing demand in the DeFi space for productive assets.
This move also helps WLFI compete with other stablecoins that offer yield-generating opportunities. As the DeFi ecosystem continues to evolve, stablecoins that can provide additional utility beyond price stability are becoming increasingly attractive to investors and institutions.
Market Response and Implications
The announcement had an immediate impact on Kernel DAO’s native KERNEL token, which surged over 7% following the partnership reveal. This price movement reflects market optimism about the collaboration, even though specific details about the restaking mechanism remain limited.
Currently, the total value locked in the Kernel ecosystem stands at approximately $2.55 million, indicating early adoption of the restaking model. As more USD1 holders participate, this figure is expected to grow significantly.
The integration also benefits Kernel DAO by expanding its asset base and strengthening its position as a next-generation security protocol. With backing from a well-known stablecoin, the DAO gains additional credibility and functionality that could attract more developers and users to its platform.
Broader DeFi Context
This partnership reflects broader trends in the DeFi space, where projects are seeking to maximize capital efficiency. Rather than having assets sit idle, protocols are developing innovative ways to put crypto holdings to work across multiple applications simultaneously.
Restaking represents one of the fastest-growing segments in DeFi, as it allows token holders to earn additional rewards without giving up ownership of their assets. For stablecoin holders specifically, this addresses the challenge of earning meaningful returns while maintaining exposure to stable, dollar-pegged assets.
The success of this USD1-Kernel DAO integration could pave the way for other stablecoins to explore similar partnerships. As restaking technology matures, it may become a standard feature expected by stablecoin users.
Previous USD1 Partnerships
The Kernel DAO integration builds on WLFI’s existing DeFi partnerships. The company has already collaborated with StakeStone for USD1 staking services and with Lista DAO for stable yield farming opportunities. These partnerships demonstrate WLFI’s commitment to expanding USD1’s utility across the DeFi ecosystem.
Additionally, USD1 has gained support from major cryptocurrency exchange Binance, which was the first major platform to list the stablecoin. This exchange relationship has provided USD1 with significant liquidity and global visibility.
Political and Regulatory Context
Despite its technical merits, USD1 continues to face scrutiny from U.S. policymakers and Democratic politicians. Earlier this month, WLFI publicly rejected a Senate probe into its operations, dismissing the inquiry as politically motivated.
Senator Richard Blumenthal launched a preliminary investigation into WLFI’s political connections and foreign investment sources, raising concerns about governance, national security implications, and potential conflicts of interest related to Trump’s involvement.
However, WLFI appears focused on building legitimate DeFi infrastructure rather than engaging with political controversies. The Kernel DAO partnership represents a technical achievement that stands on its own merits, regardless of political associations.
Looking Forward
The USD1-Kernel DAO integration marks an important milestone in stablecoin evolution. By combining price stability with yield generation and network security participation, this partnership creates a new model for how stablecoins can function in the DeFi ecosystem.
As the partnership develops and more details emerge about the restaking mechanism, it will be important to monitor adoption rates, reward structures, and overall impact on both projects. Success could lead to additional integrations and establish USD1 as a leading utility-focused stablecoin.
For the broader cryptocurrency market, this development demonstrates how projects with political associations can still contribute meaningful technological innovations to the DeFi space. The focus on practical utility over political messaging may help USD1 gain acceptance among technical users and institutional investors who prioritize functionality over branding.
The integration is expected to go live in the coming weeks, with both WLFI and Kernel DAO working to ensure smooth implementation of the restaking mechanism.
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