World Liberty Financial rushed to repay $25 million of its heavily vetted loan on the DeFi lending protocol Dolomite.
The immediate payments include $15 million on April 7 and an additional $10 million on April 10. The payments arrive amid mounting industry backlash over the project’s use of its token as collateral.
WLFI’s repayment comes after intense community pressure
Data from BeInCrypto showed that the ongoing controversy led to the WLFI token falling to an all-time low of $0.07967. This is its weakest performance since The highly publicized project will be launched in 2025.
The market decline comes on the heels of revelations that World Liberty essentially used its governance tokens as collateral to mine massive amounts of stablecoins.
According to Arkham Intelligence, Trump project It pledged approximately US$406 million from WLFI via two digital wallets to borrow US$150 million from USDC.
This maneuver quickly exhausted Dolomite’s US$1 lending poolWhich pushed usage rates above 93%. As a result, individual depositors faced a severe liquidity crisis, making it difficult to withdraw their funds.
At the same time, aspects of the deal were further complicated by tangled leadership. Corey Kaplan, co-founder of Dolomite, currently serves as an official advisor to the company Global financial freedom.
As digital asset prices decline, DeFi analysts have raised alarms about the systemic risks of bad debt. WLFI’s collateral now represents approximately 55% of Dolomite’s total value of $835.7 million, significantly concentrating risk in a single low-value asset.
World Liberty Financial rejects “FUD”
but, World Liberty executives responded forcefully In the face of market anxiety, he dismissed fears of insolvency as “FUD”.
In a series of statements on social media, developers argued that their massive borrowing benefits the broader ecosystem. They claimed that acting as a “prime borrower” generated a significant return for other participants.
However, critics have warned that a sharp decline could increase the risk of bad debts for lenders if the value of collateral declines faster than the position can be adjusted. World Liberty rejected this scenario, saying it could provide further guarantees if necessary.
“We are one of the largest suppliers and borrowers on WLFI Markets. Yes, we have provided WLFI as collateral and borrowed stablecoins. No, we are not close to being liquidated – and frankly, even if the markets moved significantly against us, we would simply provide more collateral. This is not a risk. This is how things work.”
In a simultaneous attempt to appease early backers facing heavy card losses, World Liberty was created Announce An upcoming governance proposal to open captive tokens.
According to the team, the proposed framework will have a structured, long-term vesting schedule specifically targeting early retail buyers.
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