WLFI Lending Move Freezes User Withdrawals
The World Liberty Financial (WLFI) token, closely associated with Donald Trump and his family, has seen its value tumble after a controversial lending maneuver locked up user funds on a major decentra
These deposits enabled World Liberty Financial to borrow up to $150 million in stablecoins like USD1 and USDC. However, this move drained Dolomite’s USD1 lending pool so thoroughly that other users were left unable to withdraw their own funds. On paper, the protocol is decentralized, but in reality, control over such a large portion of collateral left ordinary depositors stranded.
World Liberty Financial did not directly dispute the details of these transactions when questioned, instead stating it would add more tokens as collateral to avoid forced liquidation—leaving many investors uneasy about the project’s transparency and priorities.
Millions in Buybacks, But Price Tanks
Despite aggressive buyback efforts, WLFI’s price continues to spiral downward. Over the past six months, the team disclosed open-market repurchases totaling $65.58 million for 435.3 million tokens at an average price of $0.1507 each. Yet today’s trading price stands roughly 48% below that average, with WLFI hitting its lowest level since its launch in 2025.
WLFI fell to a record low of $0.07714 on Saturday, down 83% from its September 2023 peak of $0.46, according to CoinMarketCap.
The gap between buyback cost and current value highlights mounting pressure on the project’s treasury and raises questions about whether further interventions could stabilize the token. Three billion additional WLFI tokens were transferred to an intermediary wallet on April 2 and April 7—worth about $234 million at current prices—signaling continued movement behind the scenes even as public confidence wanes.
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Stablecoin Borrowing Raises Red Flags
World Liberty Financial’s use of its own governance token as loan collateral has drawn scrutiny for both scale and timing. Wallets linked to the project posted nearly $400 million worth of WLFI—representing about 98% of all WLFI on Dolomite—as backing for stablecoin loans totaling $75 million or more. According to decrypt.co, more than $40 million of these borrowed funds were transferred to Coinbase Prime, fueling speculation about whether proceeds are being used for operational needs or other undisclosed purposes.
Some observers worry that so much borrowing against illiquid assets could amplify risk if market conditions worsen.
Dolomite currently ranks nineteenth among all DeFi lending protocols by total value locked, but its exposure to one dominant borrower has put everyday users at a disadvantage—and left them unable to access their deposits while World Liberty manages its positions above liquidation thresholds.
Early Holders Push Back on Unlocks
As market turmoil intensifies, World Liberty Financial faces growing backlash from early investors over token unlock schedules. The project is now preparing a community proposal for phased unlocking of WLFI purchased by early retail buyers—a move coming roughly 18 months after its mid-October 2024 public sale. Currently, only about 24.67% of WLFI’s massive 100 billion supply has been released into circulation; around 75% remains locked or subject to future governance decisions.
This debate follows a March 16 vote that introduced a six-month lock-up rule for certain transfers, reflecting ongoing tension between investor liquidity needs and concerns over sudden increases in circulating supply. At least one self-identified presale buyer claims legal action is underway in both the United States and Netherlands against World Liberty Financial and its backers—though it is unclear if any formal lawsuits have been filed at this point.
Why it matters: Practical Impact for Users
For regular users and investors, these developments have immediate consequences: with so much of the token supply locked or tied up as lending collateral, liquidity is thin and withdrawals can be blocked without warning. The draining of Dolomite’s USD1 pool means some depositors cannot access their funds until World Liberty either repays its loans or adds even more tokens as collateral—neither outcome guaranteed given current price volatility.
The situation underscores how concentrated control over governance tokens can disrupt decentralized platforms in practice—even when protocols are designed to be open and permissionless. As World Liberty Financial weighs phased unlocks amid mounting legal threats and price declines, users are left navigating extreme uncertainty with little recourse beyond governance votes or public pressure campaigns.
What may drive the next phase
If World Liberty Financial proceeds with its planned governance vote on a phased unlock schedule for early WLFI holders—currently open for community input but not yet formally scheduled—the immediate outcome will determine whether a significant portion of the 75.33% locked token supply remains restricted or begins entering circulation.