WLFI Token Plunges to Record Low Amid Dolomite Collateral Controversy
The WLFI token plummeted 12% to an all-time low after the project used billions of its tokens as collateral for $75 million in stablecoin loans on the Dolomite platform, causing a liquidity crisis that blocked user withdrawals. This controversy led to significant losses, including a $11 million decline in Tron’s Justin Sun’s locked WLFI position, and left treasury repurchase operations underwater by 48%. The incident raises serious concerns about the project’s financial stability and risk management.
Key Takeaways The WLFI token plunged 12% to reach an all-time low since its 2025 debut The project leveraged its native WLFI tokens as collateral for stablecoin loans on the Dolomite platform This borrowing activity exhausted Dolomite’s USD1 liquidity pool, preventing other users from accessing withdrawals Tron’s Justin Sun saw his locked WLFI position decline by more than $11 million within 24 hours Treasury repurchase operations are currently underwater by approximately 48% The World Liberty Financial token experienced a sharp 12% decline over a 24-hour period, reaching its lowest valuation since its 2025 introduction. The digital asset traded around $0.0818, compounding weekly declines of 15% and monthly losses totaling 17%. World Liberty Financial (WLFI) Price The dramatic price movement followed a CoinDesk investigation revealing that WLFI had pledged billions of its proprietary governance tokens as collateral within the Dolomite lending infrastructure. Using this collateral base, the initiative secured substantial stablecoin loans, including USDC and its proprietary USD1 token, totaling tens of millions of dollars. Blockchain intelligence from Arykham verified that a project-controlled wallet deposited 5 billion WLFI tokens as collateral on Dolomite, facilitating approximately $75 million in stablecoin borrowings. Subsequently, more than $40 million of these borrowed assets were moved to Coinbase Prime. Day 44: We're seeing insane levels of crime once again. Yesterday, Trump family's crypto project deposited 5% of $WLFI's total supply on Dolomite and borrowed $75 million in stablecoins against it. 5% of WLFI's token supply is worth roughly $500M. Then, just a few hours… pic.twitter.com/ACqGXpvckg — Ethan DeFi (@EthanDeFi_) April 8, 2026 This substantial borrowing activity maxed out Dolomite’s available lending capacity, creating a liquidity crisis that temporarily prevented other protocol participants from accessing their deposited capital. Project Team Add...
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