WLFI, the native token of the Donald Trump–backed World Liberty Financial platform, plunged to an all-time low after disclosures that the project used a large share of its own tokens as collateral for loans.
The token dropped to about $0.07714 on Saturday, an approximate 83% fall from its $0.46 peak in September, according to CoinMarketCap. At the time of reporting WLFI was trading near $0.07879, down roughly 4.7% over 24 hours.
Onchain analytics show wallets tied to World Liberty Financial deposited about 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 roughly $75 million in stablecoins, and more than $40 million of the borrowed funds were later moved to Coinbase Prime.
DeFi observers flagged the large token-backed borrowing as a market-risk issue. Because a substantial amount of WLFI sits as collateral on a relatively small lending platform, a sharp price drop could push positions toward liquidation and strain lenders on Dolomite. One commentator noted WLFI’s nearly $10 billion fully diluted valuation but highlighted low liquidity, warning of severe market impact if even a small percentage of supply had to be sold to cover liquidations. Another compared the setup to issuing casino chips and borrowing against them.
Dolomite ranks 19th by total value locked per DefiLlama, a positioning that raised additional concerns about market depth and the protocol’s capacity to handle large forced sales.
World Liberty Financial publicly acknowledged the borrowing activity, calling the positions well above liquidation thresholds and describing the project as an “anchor borrower” that uses token-backed loans to generate yield. The team said the strategy produces outsized stablecoin yields for everyday users compared with returns in traditional markets.
In response to the market reaction, the project said it will submit a governance proposal to implement a phased unlock schedule and long-term vesting for WLFI tokens held by early retail buyers, replacing immediate token access with a community-voted vesting plan.
Market participants and onchain watchers will be monitoring WLFI liquidity, the health of collateralized positions on Dolomite, and the outcome of the proposed governance changes as the situation develops.