World Liberty Financial has borrowed approximately $75 million using its own WLFI token as collateral on the Dolomite platform, raising concerns among decentralized finance users and analysts.
The project reportedly deposited around 5 billion WLFI tokens into Dolomite and withdrew about $65.4 million in its native USD1 stablecoin along with $10.3 million in USDC. Following the transaction, WLFI’s price declined roughly 10%, reaching a record low near $0.0885.
High Collateral Concentration Raises Liquidity Concerns
Arkham data indicates that World Liberty Financial’s deposit now accounts for nearly 55% of Dolomite’s roughly $835 million total value locked. This sharp concentration pushed pool utilization to 100%, meaning depositors who supplied stablecoins to earn yield may temporarily face difficulty withdrawing their funds.
Such heavy reliance on a single borrower increases systemic risk, particularly if the collateral token experiences further price declines. Market participants have expressed concern about the broader implications for platform stability.
Governance Conflict Concerns Add to Market Scrutiny
Criticism intensified due to governance ties between the two entities. Corey Caplan, who helped establish the lending platform in 2017, also serves as an advisor to World Liberty Financial, a role announced in August 2024.
The project is associated with Donald Trump, placing additional public attention on the situation. Analysts note that overlapping roles between protocol leadership and borrowers can raise transparency and risk-management concerns within decentralized finance ecosystems.
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