The crypto venture World Liberty Financial, co-founded by the Trump family, has undertaken a series of transactions via the decentralized finance (DeFi) lending protocol Dolomite. These actions raise concerns about insider access and concentrated risk for other depositors.
CoinDesk’s analysis of onchain data from Etherscan, Arkham, and publicly available wallet information reveals that these activities commenced on February 8. On this date, World Liberty Financial’s treasury deposited 14 million USD1—its proprietary dollar-pegged stablecoin—into Dolomite as collateral and borrowed 11.4 million USDC against it.
Shortly after, 11.45 million USDC were transferred to a Coinbase Prime deposit address, according to Arkham data. Two days later, an additional 12.5 million USD1 was sent from the treasury directly to another Coinbase Prime deposit address. This transaction indicates that the venture moved its own stablecoin straight to a fiat off-ramp without borrowing from Dolomite.
The involvement of WLFI tokens emerged twelve days later, on February 20, when the treasury deposited 890 million WLFI into Dolomite and borrowed 20 million USD1 against it. By March 24, an additional 1.1 billion WLFI had been deposited, totaling 1.99 billion WLFI tokens as collateral in Dolomite. This resulted in approximately 31.4 million stablecoins being received from the protocol.
The choice of Dolomite is significant, given that Corey Caplan, a co-founder of Dolomite and an advisor to World Liberty Financial, has influenced this decision. WLFI now leads Dolomite’s supplied-assets list with $458.9 million in supply liquidity, accounting for about 55% of the protocol’s total $835.7 million.
Concerns arise from Dolomite’s USD1 pool structure. With $4.6 billion in circulation, USD1 ranks second on the protocol, showing $180 million supplied against $167.5 million borrowed, resulting in a utilization ratio near 93%. The high supply rate of 16.24% and borrow rate of 9.18% suggest concentrated borrowing activity rather than broad organic demand.
This utilization level means ordinary depositors who lent USD1 expecting liquidity cannot all withdraw simultaneously until the large borrower repays. Additionally, the collateral backing WLFI-denominated borrows presents issues due to its limited market depth. If a sharp drop in token value triggers Dolomite’s liquidation mechanism, the forced sale could crash prices before unwinding collateral, leaving the protocol with bad debt affecting retail depositors.
In April, activity intensified through another route: on April 2, the WLFI treasury transferred 2 billion WLFI to a Gnosis Safe proxy wallet at address 0x44a681DD. Five days later, it sent an additional 1 billion. These transfers did not go directly to Dolomite, and current onchain data does not reveal their destination. The three billion tokens are valued at approximately $266 million based on WLFI’s current price of $0.0888.
World Liberty Financial has yet to respond to CoinDesk’s request for comment.