- World Liberty Financial has repaid $25 million of its loan from Dolomite.
- The WLFI token reached an all-time low amidst community concerns regarding its collateralization strategy.
- The project asserts it is not facing liquidation and plans to introduce a phased token unlock for early investors.
World Liberty Financial has executed significant repayments, totaling $25 million, towards its loan on the DeFi lending protocol Dolomite. These transactions, divided into $15 million on April 7 and $10 million on April 10, occur against a backdrop of intense scrutiny regarding the project’s utilization of its native token as collateral.
WLFI Token Plummets Amid Collateralization Controversy
The controversy has severely impacted the WLFI token, driving it to an all-time low of $0.07967, its lowest valuation since its introduction in 2025. The price decline follows disclosures that World Liberty Financial leveraged substantial amounts of its own governance tokens as collateral to secure large volumes of stablecoins.
On-chain data indicates that the venture, associated with Donald Trump, pledged approximately $406 million worth of WLFI across two digital wallets to borrow $150 million in USDC. This action significantly increased the utilization rate of Dolomite’s USD1 lending pool, exceeding 93%, which consequently led to a liquidity shortage for retail depositors attempting to withdraw their funds.
Further complicating the situation is the connection between Dolomite and World Liberty Financial, with Dolomite co-founder Corey Caplan also serving as an advisor to World Liberty Financial. The substantial exposure of WLFI as collateral now represents about 55% of Dolomite’s total value locked ($835.7 million), concentrating significant risk within a single, depreciating asset.
The WLFI Team is borrowing $150M USDC against $400M WLFI on Dolomite.
The WLFI Team is lending $406.23M of WLFI across 2 wallets. That is 4.99% of the supply, and 97.8% of the WLFI cap on Dolomite.
They are borrowing a total of $150M USDC against their holdings on Dolomite. pic.twitter.com/7dPsDKF73R
World Liberty Financial Addresses Market Concerns
Despite the market reaction, World Liberty Financial executives have actively countered fears of insolvency, characterizing the negative sentiment as “FUD” (Fear, Uncertainty, and Doubt). The project’s development team asserts that their substantial borrowing activities are intended to benefit the broader ecosystem by acting as an “anchor borrower,” thereby generating increased yields for other participants.
Critics, however, have voiced concerns about the potential for bad debt if the collateral’s value declines faster than positions can be adjusted. World Liberty Financial has refuted these concerns, stating its capacity to provide additional collateral if market conditions necessitate.
“We are one of the largest suppliers and borrowers on WLFI Markets. Yes, we supplied WLFI as collateral and borrowed stablecoins. No, we are nowhere near liquidation — and frankly, even if markets moved dramatically against us, we’d simply supply more collateral. That’s not a risk. That’s how this works,” the team stated.
In an effort to support early investors who have experienced significant paper losses, World Liberty Financial has announced plans for a governance proposal focused on unlocking restricted tokens. The proposed structure is expected to detail a long-term vesting schedule specifically designed for early retail investors.
According to the portal: beincrypto.com