World Liberty Financial, the crypto venture co-founded by the Trump family, used DeFi lending protocol Dolomite in a series of transactions that added up to about $75 million in borrowing. The onchain trail has drawn attention because it combined the project’s own stablecoin USD1, its WLFI token, and a lending venue linked to one of its advisers.
Records reviewed by CoinDesk from Etherscan, Arkham, and public wallet data show the sequence started on Feb. 8. WLFI’s treasury deposited 14 million USD1 into Dolomite as collateral and borrowed 11.4 million USDC. Minutes later, 11.45 million USDC moved to a Coinbase Prime deposit address. Two days after that, another 12.5 million USD1 was sent from the treasury to a separate Coinbase Prime deposit address.
That 12.5 million USD1 did not come from a Dolomite loan. It was transferred directly from WLFI’s treasury wallet to the exchange. The report notes that Coinbase Prime is commonly used for converting crypto to fiat or for institutional over-the-counter trading.
WLFI token was later posted as collateral
On Feb. 20, the treasury deposited 890 million WLFI into Dolomite and borrowed 20 million USD1. On March 24, it added another 1.1 billion WLFI. That brought the total WLFI posted as collateral on Dolomite to 1.99 billion tokens. Across the two borrowing episodes, the treasury received roughly $31.4 million in stablecoins from the protocol.
The protocol choice is part of the scrutiny. Dolomite co-founder Corey Caplan is also an adviser to World Liberty Financial. WLFI now sits at the top of Dolomite’s supplied-assets list with $458.9 million in supplied liquidity, equal to about 55% of the protocol’s total $835.7 million.
USD1 pool shows heavy utilization
The sharpest concern sits in Dolomite’s USD1 market. According to the report, USD1 has $4.6 billion in circulation. Inside Dolomite, the token has $180 million supplied and $167.5 million borrowed, leaving the pool with a utilization rate of about 93%. At that level, depositors who supplied USD1 expecting to withdraw on demand cannot all exit at the same time. Their funds stay tied up until the large borrower repays.
Pool pricing points to concentrated demand. USD1’s supply rate stands at 16.24%, while the borrow rate is 9.18%. The article says those figures look less like broad organic borrowing and more like activity driven by a small number of large positions.
Limited market depth could turn liquidation into bad debt
The collateral itself is another pressure point. The report says WLFI trades with limited market depth relative to the size of the pledged position. If the token were to fall sharply and trigger Dolomite’s liquidation process, forced selling could push the price down before the collateral was fully unwound. That would leave the protocol with bad debt, and the burden could fall on the same retail depositors who already face withdrawal constraints in the USD1 pool.
The onchain sequence shows more than a standard lending trade. WLFI’s own stablecoin moved through collateral and exchange transfers, its native token was posted in large size to support borrowing, and the lending venue has a direct advisory link to the project. Taken together, those elements have put Dolomite’s liquidity concentration and depositor exposure at the center of the story.