WLFI, the native token of the Donald Trump–backed World Liberty Financial platform, plunged to an all-time low Saturday after disclosures that the project used a large portion of its own tokens as loan collateral stirred market worry.
The token fell to about $0.07714 on Saturday, roughly an 83% decline from its $0.46 peak last September, according to CoinMarketCap. At the time of reporting WLFI traded near $0.07879, down about 4.66% over 24 hours.
Onchain analysis showed wallets tied to World Liberty Financial had deposited roughly 5 billion WLFI tokens on Dolomite, a decentralized lending protocol co-founded by World Liberty’s chief technology officer, Corey Caplan. That collateral was used to borrow approximately $75 million in USD1 and USDC stablecoins, with more than $40 million later moved to Coinbase Prime.
The sizeable collateral position alarmed DeFi observers who warned it could threaten lenders on Dolomite if WLFI’s price dropped toward liquidation levels. One X user noted WLFI’s nearly $10 billion fully diluted valuation but pointed to low liquidity, cautioning about the consequences if just 5% of supply had to be sold to cover a liquidation. Another commenter likened the arrangement to issuing casino chips and borrowing against them.
Dolomite is a relatively small player in decentralized lending, ranking 19th by total value locked per DefiLlama, which raised further concerns about market depth and liquidation handling.
World Liberty Financial acknowledged the borrowing activity on social media, defending the positions as well above liquidation thresholds and describing the project as an “anchor borrower” that uses token-backed loans to generate yield. The team said everyday users are benefiting from outsized stablecoin yields compared with low returns in traditional markets.
The project also announced plans to submit a governance proposal to create a phased unlock schedule and long-term vesting for WLFI tokens held by early retail buyers, replacing immediate access with a community-voted vesting plan.
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