WLFI (WLFI<\/a>) fell to a new all-time low on Saturday after onchain data showed wallets linked to World Liberty Financial used large token holdings to borrow stablecoins.\u00a0<\/strong><\/p>\n \n Summary<\/span>\n <\/p>\n <\/p>\n The move added pressure to the Trump-linked project as traders weighed the risk tied to using its own token as collateral.<\/p>\n WLFI dropped to about $0.077, its lowest level on record, before trading near $0.079. The token is now down 76% from its peak of $0.33 reached in September, based on CoinGecko data.<\/p>\n The decline followed<\/a> reports that wallets tied to World Liberty Financial deposited about 5 billion WLFI tokens on Dolomite. The same position was then used to borrow $75 million in USD1 and USDC.\\<\/p>\n <\/p>\n Arkham data showed<\/a> that more than $40 million of the borrowed funds later moved to Coinbase Prime. That transfer drew more attention to the project\u2019s financing activity and the size of its exposure.<\/p>\n The market reaction was swift because WLFI is not viewed as a deeply liquid asset. A large collateral position tied to price swings can increase pressure if the token falls further.<\/p>\n DeFi users on X said the structure could create risk for lenders if WLFI moves closer to liquidation levels. Some pointed to the token\u2019s high fully diluted valuation and limited trading depth as a weak point. <\/p>\n \u201cWLFI has almost a $10 billion FDV, but it is not an extremely liquid asset,\u201d\u00a0wrote one user. \u201cSo imagine what would happen if 5% of WLFI\u2019s total supply would suddenly need to be sold to liquidate the position.\u201d<\/p>\n<\/blockquote>\n Another user compared<\/a> the setup to borrowing cash against self-created value. The user said, <\/p>\n \u201cIt\u2019s the financial equivalent of printing casino chips, borrowing cash against them, and telling everyone else not to panic because the house still believes in the chips.\u201d<\/p>\n<\/blockquote>\n Dolomite remains a smaller player in DeFi lending. DefiLlama ranks<\/a> it 19th among lending platforms by total value locked, which added more focus to the size of the WLFI-linked position.<\/p>\n World Liberty Financial responded<\/a> on social media and said its positions remain well above liquidation thresholds. The project described itself as an \u201canchor borrower\u201d and said the strategy supports yield generation.<\/p>\n The team wrote,\u00a0<\/p>\n \u201cEveryday users are earning outsized stablecoin yields right now \u2014 at a time when traditional markets are offering very little.\u201d It added, \u201cThat\u2019s the whole point.\u201d<\/p>\n<\/blockquote>\n The project also said it plans to introduce a governance proposal for early retail holders<\/a>. The proposal would replace immediate token access with a phased vesting schedule, subject to a community vote.<\/p>\n <\/p>\n\n
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World Liberty defends the strategy<\/strong><\/h2>\n
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