WLFI Token Plummets to Record Low Amid Dolomite Collateral Controversy

Key Takeaways

• The WLFI token experienced a sharp 12% decline, reaching unprecedented lows since its 2025 debut
• The project leveraged its native WLFI tokens as security to secure stablecoin loans on the Dolomite protocol
• This strategic move depleted Dolomite’s USD1 liquidity, preventing other users from accessing their deposited assets
• Tron’s Justin Sun witnessed over $11 million evaporate from his locked WLFI position within 24 hours
• The project’s token repurchase program now shows approximately 48% unrealized losses

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The World Liberty Financial WLFI token experienced a dramatic downturn of roughly 12% over a single day, plummeting to its lowest valuation since entering the market in 2025. Trading activity showed the asset hovering around $0.0818, compounding weekly declines of 15% and monthly losses totaling 17%.

The sharp downturn followed revelations from CoinDesk exposing that WLFI had committed massive quantities of its governance tokens as security on Dolomite’s lending platform. Using this collateral, the initiative secured tens of millions in stablecoin funding, encompassing both USDC and the project’s proprietary USD1 token.

Blockchain intelligence from Arykham verified that a wallet associated with the project pledged 5 billion WLFI tokens through Dolomite, generating approximately $75 million in stablecoin loans. Subsequently, more than $40 million of these borrowed assets were moved to Coinbase Prime.

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This borrowing activity maxed out Dolomite’s available lending capacity, creating a situation where other protocol participants found themselves temporarily locked out from retrieving their deposited capital.

Project Team Addresses Growing Concerns

World Liberty Financial released a detailed statement via X pushing back against mounting criticism. The organization dismissed the apprehension as “FUD” and emphasized the project remained “nowhere near liquidation.”

“Even if markets moved dramatically against us, we’d simply supply more collateral,” the team stated. Critics pointed out that adding more WLFI to back a WLFI-collateralized position on a protocol advised by a WLFI advisor deepens the circular risk, rather than resolving it.

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Complications intensified when observers noted that Dolomite’s co-founder, Corey Caplan, simultaneously holds an advisory position with World Liberty Financial, escalating questions surrounding potential conflicts of interest among industry watchers.

According to WLFI’s disclosures, the project allocated $65.58 million toward repurchasing 435.3 million WLFI tokens at an average acquisition cost of $0.1507 throughout a six-month period. Given current trading levels near $0.078, these repurchase initiatives now reflect roughly 48% in unrealized losses.

Major Investor Suffers Substantial Losses

Justin Sun, the founder behind Tron, witnessed his immobilized WLFI stake decline by in excess of $11 million during a 24-hour window. Sun initially committed $30 million to World Liberty Financial in the closing months of 2024, subsequently expanding his position to an estimated $75 million value.

Following Sun’s wallet movement of approximately $9 million in WLFI last year, World Liberty imposed restrictions on his address, effectively freezing his token holdings. According to blockchain analysis firm Bubblemaps’ calculations, Sun currently possesses around 545 million frozen WLFI tokens valued at roughly $45 million — representing a decline exceeding $80 million from previous assessments.

An additional three billion WLFI tokens remain housed in an intermediary address following treasury movements executed on April 2 and April 7, presently valued at approximately $234 million.

Technical indicators show the RSI approaching 30, nearing oversold conditions, while MACD signals persistent bearish momentum. Immediate support exists at $0.079, with additional downside objectives identified at $0.075 and $0.070 should selling pressure intensify.