World Liberty Financial’s WLFI token fell about 12% in the last 24 hours after the Trump-linked crypto venture posted a thread on X defending its lending position on Dolomite, the DeFi protocol whose co-founder advises WLFI.
The thread came in response to CoinDesk’s reporting that WLFI had deposited its own governance token as collateral, borrowed stablecoins against it, and drained the USD1 lending pool to the point where other depositors could not withdraw.
WLFI did not dispute the transactions, but instead argued that the position was intentional and beneficial.
“We are one of the largest suppliers and borrowers on WLFI Markets,” the X account wrote. “Yes, we collateralized WLFI and borrowed stablecoins. No, we are nowhere near liquidation, and frankly, even if the markets moved dramatically against us, we simply wanted to provide more collateral.”
The statement that WLFI would add more of its own token as collateral to avoid liquidation highlights, rather than addresses, the concern raised in CoinDesk’s reporting.
Adding more WLFI to support a position denominated in WLFI on a protocol recommended by WLFI’s own advisor is a form of circularity that investors may want to watch out for.
Framing its role as an “anchor borrower,” WLFI said the borrowing generates returns for other users at a time when traditional markets are not offering much. The team revealed $65.58 million in open market buybacks of 435.3 million WLFI tokens at an average price of $0.1507 over the past six months, and said a government proposal to unlock tokens for early holders would be announced next week.
The token is now trading around 48% below the repurchase average, meaning WLFI’s own purchases of the Treasury are significantly underwater.
WLFI has now hit its lowest level since launch in 2025.
Meanwhile, another three billion WLFI tokens are sitting in an intermediate wallet after the Treasury transferred them on April 2nd and April 7th. That stash is worth about $234 million in current prices, down from $266 million a week ago.
The math works against WLFI on all sides if these tokens follow the same path into Dolomite. Lower prices mean less borrowing power per token, and depositing more tokens to borrow more stablecoins from a pool that is already nearly drained makes it harder for other depositors to withdraw. The security backing the position becomes even more concentrated in a token that just lost 12% in a day.
