Trump-backed WLFI token drops 12% to record lows after team defends multi-million lending position

World Liberty Financial’s WLFI token fell about 12% to its lowest level since its 2025 launch after the Trump-linked crypto venture defended a controversial lending strategy on the Dolomite DeFi platform.

In response to reporting that WLFI deposited its own governance token as collateral, borrowed stablecoins against it, and drained Dolomite’s USD1 lending pool to the point where other depositors could not withdraw, WLFI did not dispute the transactions. Instead, it argued the position was intentional and beneficial.

WLFI defends “anchor borrower” strategy

WLFI said it is an “anchor borrower” and that using WLFI as collateral to borrow stablecoins generates yield for other users. The firm also said it could avoid liquidation by posting more WLFI if markets moved against it.

“We are one of the largest suppliers and borrowers on WLFI Markets. Yes, we supplied WLFI as collateral and borrowed stablecoins. No, we are nowhere near liquidation, and frankly, even if markets moved dramatically against us, we'd simply supply more collateral.”

The defense highlights a key concern raised by critics: the strategy relies on adding more of the same token used as collateral, even as the token’s price declines.

Buybacks disclosed; token trades well below average

WLFI disclosed $65.58 million in open-market buybacks of 435.3 million WLFI tokens at an average price of $0.1507 over the past six months. The token is now trading roughly 48% below that buyback average, meaning the treasury’s purchases are significantly underwater.

Dolomite pool and withdrawal constraints

According to the reporting referenced in the article, WLFI’s actions on Dolomite involved draining the USD1 lending pool to the point where other depositors could not withdraw. WLFI’s response did not dispute the underlying activity, instead framing it as part of a yield-generating role.

Critics argue the approach deepens a circular risk loop: falling WLFI prices reduce borrowing power, concentrate collateral in a sliding token, and worsen withdrawal constraints for existing Dolomite depositors.

Additional WLFI tokens transferred to an intermediary wallet

The article also notes that three billion additional WLFI tokens sit in an intermediary wallet after the treasury transferred them on April 2 and April 7. That stash is valued at roughly $234 million at current prices, down from $266 million a week earlier.

The article concludes that if those tokens follow the same path into Dolomite, the dynamics could further pressure the system: lower WLFI prices would mean less borrowing power per token, and depositing more tokens into a pool that is already nearly drained could make it harder for other depositors to withdraw.