WLFI sank to a fresh all-time low on Saturday after onchain data showed wallets linked to World Liberty Financial posted large amounts of the token as collateral and borrowed stablecoins on Dolomite. The move quickly shifted market attention to the project’s financing structure and to the downside risk tied to a thinly traded collateral asset.
The token fell to about $0.077 before changing hands near $0.079. Based on CoinGecko data, WLFI is now down 76% from its September peak of $0.33. The project’s Trump ties added to scrutiny as traders reassessed how this borrowing activity could affect the token if prices weaken again.
5 billion WLFI deposited to borrow $75 million in stablecoins
Reports said wallets tied to the project deposited roughly 5 billion WLFI on Dolomite. That position was then used to borrow $75 million in USD1 and USDC. Arkham data showed that more than $40 million of the borrowed funds later moved to Coinbase Prime, a transfer that drew extra attention to the scale of the exposure and to how the capital was being used.
The size of the borrowing was only part of the issue. WLFI is not widely seen as a deeply liquid token, and a large collateral position backed by an asset with limited trading depth can become harder to manage if prices keep falling.
Debate centers on liquidation pressure at Dolomite
DeFi users on X questioned whether the structure could expose lenders to stress if WLFI moves closer to liquidation levels. Some pointed to the token’s high fully diluted valuation and shallow market depth as the weak point in the setup. Another user compared the arrangement to borrowing real cash against value created by the issuer itself, arguing that the market should not ignore that distinction.
According to DefiLlama, Dolomite ranks 19th among lending platforms by total value locked. Its smaller footprint in DeFi lending brought even more focus to the size of the WLFI-linked position.
World Liberty says positions remain above liquidation thresholds
World Liberty Financial pushed back on social media, saying its positions remain well above liquidation thresholds. The project described itself as an “anchor borrower” and said the strategy is designed to generate yield. In its statement, the team said everyday users are currently earning elevated stablecoin yields while traditional markets offer very little, adding that this outcome is the point of the strategy.
The project also said it plans to introduce a governance proposal for early retail holders. Under that proposal, immediate token access would be replaced with a phased vesting schedule, subject to a community vote.