Key Points
- The WLFI token plummeted 12% to reach unprecedented lows since its 2025 debut
- World Liberty Financial pledged billions of its native WLFI tokens as collateral for stablecoin loans on Dolomite’s DeFi platform
- The massive borrowing exhausted Dolomite’s USD1 liquidity pool, preventing other users from accessing their deposits
- Justin Sun’s locked WLFI position shed more than $11 million in a 24-hour period
- The project’s treasury repurchase program is currently sitting on approximately 48% unrealized losses
The WLFI token from World Liberty Financial experienced a sharp 12% decline over a 24-hour span, plunging to its weakest level since the token’s 2025 introduction. Trading data showed the asset hovering around $0.0818, compounding a 15% weekly slide and a 17% monthly retreat.
The sharp downturn followed revelations from CoinDesk highlighting that WLFI had pledged massive quantities of its native governance tokens as security on the Dolomite lending platform. Using this collateral, the initiative secured tens of millions in stablecoins, encompassing both USDC and its proprietary USD1 token.
Blockchain intelligence from Arykham verified that a wallet associated with the project locked up 5 billion WLFI tokens on Dolomite, facilitating approximately $75 million in stablecoin borrowings. Following this transaction, more than $40 million of the borrowed capital was moved to Coinbase Prime.
The substantial borrowing activity maxed out Dolomite’s available lending capacity. This development temporarily prevented other platform users from retrieving their deposited assets.
World Liberty Pushes Back Against Critics
World Liberty Financial published a detailed thread on X pushing back against the mounting criticism. The organization characterized the worries as “FUD” and insisted the project remained “nowhere near liquidation.”
“Even if markets moved dramatically against us, we’d simply supply more collateral,” the team declared. However, skeptics argued that depositing additional WLFI tokens to support a WLFI-backed loan on a platform where a WLFI advisor holds influence only compounds the self-referential risk instead of mitigating it.
Adding fuel to the controversy, Dolomite co-founder Corey Caplan simultaneously serves in an advisory capacity for World Liberty Financial, intensifying conflict-of-interest questions from market observers.
World Liberty Financial revealed it had allocated $65.58 million toward repurchasing 435.3 million WLFI tokens over a six-month timeframe, establishing an average acquisition cost of $0.1507 per token. With current trading prices near $0.078, these repurchase operations are facing roughly 48% unrealized losses.
Justin Sun’s Position Takes Major Loss
Tron’s founder Justin Sun witnessed his immobilized WLFI holdings decline by over $11 million within a single trading day. Sun initially committed $30 million to World Liberty Financial in the final months of 2024, subsequently expanding his stake to approximately $75 million.
World Liberty Financial blacklisted Sun’s address last year following a roughly $9 million WLFI transfer, effectively freezing his token holdings. According to blockchain analytics provider Bubblemaps, Sun currently possesses approximately 545 million frozen WLFI tokens valued near $45 million — representing a decline exceeding $80 million from previous valuations.
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 roughly $234 million.
Technical indicators show the RSI hovering near 30, approaching oversold conditions, while MACD signals persistent bearish momentum. Immediate support appears at $0.079, with additional downside objectives identified at $0.075 and $0.070 should selling pressure persist.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
