The WLFI token, associated with the crypto venture World Liberty Financial linked to Trump, experienced a 12% drop in value over the past day. This decline followed the company’s defense on X regarding its lending activities on Dolomite, a DeFi protocol advised by one of WLFI’s co-founders.
CoinDesk had previously reported that WLFI used its own governance token as collateral to secure stablecoin loans, which depleted the USD1 lending pool and restricted withdrawals for other depositors. While WLFI did not contest these actions, it claimed they were intentional and advantageous.
WLFI stated plans to increase its token collateral to prevent liquidation, a move that emphasizes concerns highlighted by CoinDesk regarding circular financial practices involving Dolomite, advised by a WLFI co-founder.
The firm described itself as an “anchor borrower,” suggesting this strategy would provide yield benefits for users amid low returns in traditional markets. Over the last six months, WLFI conducted open-market buybacks amounting to $65.58 million on 435.3 million tokens at an average price of $0.1507. A proposal to unlock tokens for early holders is expected soon.
Currently, the token trades about 48% below its buyback average, indicating significant underwater losses for WLFI’s treasury purchases. The token has reached its lowest point since its launch in 2025.
Additionally, three billion WLFI tokens reside in an intermediary wallet after being transferred by WLFI on April 2 and April 7. This amount is valued at roughly $234 million with current prices, down from $266 million a week prior. If these tokens follow the same path into Dolomite, it could exacerbate borrowing issues due to reduced collateral value per token, complicating withdrawals for other depositors as the pool continues to shrink.