WLFI (WLFI) fell to a new all-time low on Saturday after onchain data showed wallets linked to World Liberty Financial used large token holdings 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.
The move added pressure to the Trump-linked project as traders weighed the risk tied to using its own token as collateral.
WLFI dropped to about $0.077, its lowest level on record, before trading near $0.079. The token is now down 76% from its peak of $0.33 reached in September, based on CoinGecko data.
WLFI price chart | Source: CoinGeckoThe decline followed reports that wallets tied to World Liberty Financial deposited about 5 billion WLFI tokens on Dolomite. The same 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. That transfer drew more attention to the project’s financing activity and the size of its exposure.
The market reaction was swift because WLFI is not viewed as a deeply liquid asset. A large collateral position tied to price swings can increase pressure if the token falls further.
DeFi users on X said the structure could create risk for lenders if WLFI moves closer to liquidation levels. Some pointed to the token’s high fully diluted valuation and limited trading depth as a weak point.
Another user compared the setup to borrowing cash against self-created value. The user said,
Dolomite remains a smaller player in DeFi lending. DefiLlama ranks it 19th among lending platforms by total value locked, which added more focus to the size of the WLFI-linked position.
World Liberty defends the strategy
World Liberty Financial responded on social media and said its positions remain well above liquidation thresholds. The project described itself as an “anchor borrower” and said the strategy supports yield generation.
The team wrote,
The project also said it plans to introduce a governance proposal for early retail holders. The proposal would replace immediate token access with a phased vesting schedule, subject to a community vote.
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Source: https://crypto.news/wlfi-drops-to-record-low-after-token-backed-loan-draws-scrutiny/
