World Liberty Financial, a venture linked with former President Donald Trump, minted 25 million USD1 stablecoins on Monday morning while simultaneously burning 3 million through its TokenGovernor contract. On-chain data confirms these transactions as the company navigates repercussions from a lending scenario involving the DeFi protocol Dolomite which had left depositors stranded.
This maneuver follows WLFI’s claim, made last week after CoinDesk’s reporting on the issue, that it had repaid $25 million of an approximately $75 million loan backed by its governance tokens. The venture had used billions in WLFI tokens as collateral to secure stablecoins, part of which was sent to Coinbase Prime. This action pushed Dolomite’s USD1 lending pool to nearly full capacity, restricting other depositors from withdrawing their funds.
The minting operation was facilitated through BitGo Custody and executed using WLFI’s USD1 Mint Authority contract. The 3 million USD1 tokens were transferred from an address beginning with 0x2ce to the TokenGovernor contract and then sent to a null address, effectively removing them from circulation permanently.
Prior to the minting event, smaller transactions involving $10, $10,000, and $40,800 in USD1 were directed to a previously unused address. These actions are indicative of wallet verification procedures preceding larger financial transfers.
The net outcome is a $22 million rise in USD1 supply, with the simultaneous mint and burn suggesting active management over simple expansion. The reasons behind burning those 3 million USD1 remain unspecified by WLFI, which typically burns tokens when collateral is redeemed but has not revealed any specific rationale this time around.
It remains uncertain whether the newly minted stablecoins will replenish Dolomite’s lending pool, support additional treasury operations, or fulfill another purpose. Since CoinDesk’s initial report on April 9 concerning the Dolomite transactions, WLFI’s governance token value has dropped by approximately 15%. Corey Caplan, a co-founder of Dolomite, serves as an advisor to World Liberty Financial.
CoinDesk has sought comments from World Liberty Financial during European morning hours.