WLFI Plummets to All-Time Low Amid Controversial Token Loan Strategy

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WLFI drops to record low after token-backed loan draws ccrutiny

WLFI experienced a record low price on Saturday, triggered by data revealing that wallets associated with World Liberty Financial used significant amounts of their tokens to borrow stablecoins.

Summary

  • WLFI fell to a record low after a self-backed loan raised fresh market risk questions.
  • Onchain data showed linked wallets used 5 billion WLFI tokens to borrow stablecoins on Dolomite.
  • World Liberty said its positions remain safe and framed the lending move as yield strategy.

This decision created more challenges for the project associated with Trump, as investors considered the potential dangers of using its digital currency as security for loans.

WLFI recently fell to a record low of around $0.077 before recovering slightly to around $0.079. According to data from CoinGecko, the token’s value has dropped 76% since reaching its high of $0.33 in September.

The price drop happened after it was discovered that digital wallets linked to World Liberty Financial had placed roughly 5 billion WLFI tokens on the Dolomite platform. This deposit was then used as collateral to borrow $75 million worth of USD1 and USDC stablecoins.

Blockchain analytics firm Arkham discovered that over $40 million of the project’s borrowed money was transferred to Coinbase Prime. This transaction increased scrutiny of the project’s funding sources and the amount of money involved.

As an analyst, I observed a quick market response, largely because WLFI isn’t easily traded – it doesn’t have a lot of liquidity. This means a significant amount of collateral backing it, particularly if the price starts to drop, can create further downward pressure. Essentially, any price decline could be amplified by the collateral requirements.

Analysts question liquidation risk on Dolomite

People using DeFi on X expressed concerns that if WLFI’s price drops further, lenders could face risks. They highlighted the token’s high potential value if all tokens were in circulation, combined with the relatively low amount of trading activity, as potential weaknesses.

One user pointed out that WLFI has a market value of nearly $10 billion, but it’s not easily bought or sold. They wondered what would happen if 5% of all WLFI tokens were suddenly put up for sale to cover a financial position.

Another user compared the setup to borrowing cash against self-created value. The user said,

This situation is like a casino creating its own money, borrowing against it, and then asking everyone to stay calm and trust that the casino’s money is still valuable.

Dolomite is still a relatively small platform in the decentralized finance (DeFi) lending space. It currently ranks 19th by total value locked, according to DefiLlama, which has drawn attention to the size of its position linked to the WLFI token.

World Liberty defends the strategy

I saw World Liberty Financial address the recent market stuff on social media, and they’re saying everything’s okay – their investments are still well above the point where they’d have to sell at a loss. They explained they act as a kind of ‘anchor borrower,’ which is how they’re still making returns, even with everything going on.

The team wrote, 

Right now, ordinary people are getting surprisingly high returns on stablecoins, especially compared to the low returns offered by traditional investments. And that’s exactly why these platforms exist.

The project intends to propose a change for people who bought the token early. This change would involve releasing tokens gradually over time instead of all at once, and it will be put to a vote by the community.

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2026-04-11 13:38