World Liberty Monetary’s WLFI token fell about 12% up to now 24 hours after the Trump-linked crypto enterprise revealed a thread on X defending its lending place on Dolomite, the DeFi protocol whose co-founder advises WLFI.
The thread got here in response to CoinDesk’s reporting that WLFI had deposited its personal governance token as collateral, borrowed stablecoins towards it, and drained the USD1 lending pool to the purpose the place different depositors couldn’t withdraw.
When CoinDesk reached out for a remark, WLFI didn’t instantly handle or dispute the transactions. As an alternative, it pointed to a social media submit revealed after CoinDesk’s report, which argued that the place was intentional and useful.
“We’re one of many largest suppliers and debtors on WLFI Markets,” the X account posted. “Sure, we equipped WLFI as collateral and borrowed stablecoins. No, we’re nowhere close to liquidation, and admittedly, even when markets moved dramatically towards us, we might merely provide extra collateral.”
The assertion additionally famous that WLFI would add extra of its personal token as collateral to keep away from liquidation, additional highlighting, fairly than resolving, the priority raised in CoinDesk’s reporting.
Including extra WLFI to again a place denominated in WLFI on a protocol suggested by WLFI’s personal advisor is a type of circularity that buyers could need to preserve observe of.
WLFI framed its function as “anchor borrower,” saying the borrowing generates yield for different customers at a time when conventional markets provide little. The group disclosed $65.58 million in open-market buybacks of 435.3 million WLFI tokens at a mean value of $0.1507 over the previous six months, and mentioned a governance proposal to unlock tokens for early holders can be posted subsequent week.
The token is now buying and selling roughly 48% under the buyback common, which means WLFI’s personal treasury purchases are considerably underwater.
WLFI has now hit its lowest stage since its 2025 launch.
In the meantime, three billion extra WLFI tokens sit in an middleman pockets after the treasury transferred them on April 2 and April 7. That stash is price roughly $234 million as of present costs, down from $266 million per week in the past.
The maths works towards WLFI on each aspect if these tokens observe the identical path into Dolomite. Decrease costs imply much less borrowing energy per token, and depositing extra tokens to borrow extra stablecoins from a pool that’s already practically drained makes it more durable for different depositors to withdraw. The collateral backing the place turns into much more concentrated in a token that simply misplaced 12% in a day.