WLFI Token Hits All-Time Low Amid World Liberty’s DeFi Lending Controversy
World Liberty Financial has scrambled to pay down $25 million of its extremely scrutinized mortgage on the DeFi lending protocol Dolomite.
The fast repayments comprise $15 million on April 7 and an extra $10 million on April 10. These funds arrive amid mounting business backlash over the challenge’s use of its personal token as collateral.
WLFI’s Repayment Follows Intense Community Pressure
Data from BeInCrypto confirmed that the continued controversy dragged the WLFI token right down to an all-time low of $0.07967. This is its weakest efficiency for the reason that project’s highly publicized rollout in 2025.
The market rout follows revelations that World Liberty basically used its personal governance tokens as collateral to extract huge portions of stablecoins.
According to Arkham Intelligence, the Trump-affiliated venture pledged roughly $406 million value of WLFI throughout two digital wallets to borrow $150 million in USDC.
This maneuver rapidly depleted Dolomite’s USD1 lending pool, pushing utilization charges above 93%. Consequently, retail depositors confronted a extreme liquidity crunch, making it tough to withdraw their funds.
Meanwhile, the optics of the transaction had been additional sophisticated by intertwined management. Dolomite co-founder Corey Caplan presently serves as an official advisor to World Liberty Financial.
As the digital asset’s worth cratered, DeFi analysts raised alarms relating to the systemic threat of unhealthy debt. WLFI’s collateral now accounts for about 55% of Dolomite’s $835.7 million in whole worth locked, closely concentrating threat in a single, depreciating asset.
World Liberty Financial Dismisses ‘FUD’
However, World Liberty executives have aggressively pushed back in opposition to the market nervousness, dismissing insolvency fears as “FUD.”
In a collection of social media statements, the builders argued that their huge borrowing advantages the broader ecosystem. They claimed that appearing as an “anchor borrower” generates outsized yield for different members.
However, critics warned {that a} sharper decline may elevate the chance of unhealthy debt for lenders if collateral values fall sooner than the place could be adjusted. World Liberty rejected that situation, saying it may put up extra collateral if wanted.
“We are one of many largest suppliers and debtors on WLFI Markets. Yes, we equipped WLFI as collateral and borrowed stablecoins. No, we’re nowhere close to liquidation — and admittedly, even when markets moved dramatically in opposition to us, we’d merely provide extra collateral. That’s not a threat. That’s how this works,” the workforce added.
In a simultaneous bid to appease early backers going through steep paper losses, World Liberty announced an upcoming governance proposal to unlock restricted tokens.
According to the workforce, the proposed framework will characteristic a structured, long-term vesting schedule particularly focused at early retail consumers.
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