WLFI Plunges After $75M Loan Against Token Collateral

WLFI, the native token of World Liberty Financial, fell to a record low after wallets linked to the project deposited about 5 billion WLFI as collateral on the Dolomite lending platform and borrowed roughly $75 million.

Market data showed WLFI reached about $0.07714 on Saturday, down roughly 83% from a $0.46 peak last September and about 65% over the past year. The token was trading near $0.07879 at the time of reporting. On-chain records indicate the loans were taken in USD1 and USDC stablecoins, and more than $40 million of the borrowed funds were moved to a Coinbase Prime account.

On-chain analytics identified a wallet tied to World Liberty Financial that made the deposit on Dolomite, which was co-founded by the project’s chief technology officer, Corey Caplan. The wallet drew roughly $75 million against the collateral. Dolomite holds a relatively small share of total value locked compared with larger decentralized lenders.

Some DeFi analysts and users flagged a risk that a price decline toward Dolomite’s liquidation threshold could force sales of WLFI to cover the loans. One user wrote on social media, “WLFI has almost a $10 billion fully diluted valuation, but it is not an extremely liquid asset. Imagine what would happen if 5% of WLFI’s total supply would suddenly need to be sold to liquidate the position.” Another user wrote that the arrangement resembled “printing casino chips, borrowing cash against them, and telling everyone else not to panic because the house still believes in the chips.”

World Liberty Financial acknowledged the lending activity on social media and described itself as an “anchor borrower.” The project wrote that its positions remained well above liquidation levels and that the arrangement helps generate yield for users. It added it will submit a governance proposal to replace immediate token access for early retail buyers with a phased vesting schedule subject to a community vote.

Market participants will monitor WLFI’s price and the status of the loan position on Dolomite to determine whether the collateral remains sufficient or if market moves trigger liquidations.