- The World Liberty Financial token WLFI plunged to an all-time low, dropping 83% from its September peak.
- A wallet linked to the project used around 5 billion WLFI tokens as collateral to borrow $75 million in stablecoins on Dolomite, raising concerns about liquidity risks.
- DeFi analysts warn a price drop could force the liquidation of a large portion of WLFI’s supply, potentially destabilizing the lending platform.
- The project acknowledged the activity but defended it as a yield-generating strategy for users and promised a new token unlock proposal.
On Saturday, the WLFI token, native to the Donald Trump–backed World Liberty Financial platform, sank to a record low of $0.07714 amid significant user concern. This 83% drop from its September peak followed revelations that the project used its own tokens to secure large loans. CoinMarketCap data shows WLFI is currently trading at $0.07879.
The downturn occurred after onchain analysis revealed wallets linked to World Liberty Financial deployed substantial WLFI as collateral on the decentralized lending platform Dolomite. Arkham data shows a deposit of around 5 billion WLFI tokens used to borrow $75 million in stablecoins. Consequently, more than $40 million was transferred to Coinbase Prime.
This large collateral position has sparked serious concerns among DeFi analysts. They warn it could create risks for lenders on Dolomite if WLFI’s price falls and approaches liquidation levels. One user wrote on X, “Imagine what would happen if 5% of WLFI’s total supply would suddenly need to be sold to liquidate the position.” Another user argued the setup resembles creating artificial “chips” and borrowing against them.
Meanwhile, World Liberty Financial acknowledged the lending activity on social media but sought to calm markets. The project stated its positions remain well above liquidation thresholds and described itself as an “anchor borrower” for WLFI. It argued the strategy helps generate yield for everyday users at a time when traditional markets offer very little.
The project also announced it will soon introduce a governance proposal to create a phased unlock schedule for WLFI tokens held by early retail buyers. This plan would replace immediate access with a long-term vesting schedule subject to a community vote.
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