Key Highlights
- WLFI plunged 12% to reach unprecedented lows since debuting in 2025
- The project pledged billions of its native WLFI tokens as collateral on Dolomite’s decentralized lending platform
- The strategy exhausted Dolomite’s USD1 liquidity pool, preventing other users from accessing their deposits
- Justin Sun’s locked WLFI position declined by more than $11 million within 24 hours
- The project’s treasury token purchases now show approximately 48% unrealized losses
The WLFI token from World Liberty Financial experienced a sharp decline of roughly 12% over a 24-hour period, plummeting to its lowest valuation since the project’s 2025 debut. Trading data showed the token hovering around $0.0818, compounding a 15% weekly decline and 17% monthly loss.
The sharp downturn followed revelations from CoinDesk indicating that World Liberty Financial had pledged billions of its governance tokens as security on the Dolomite DeFi lending platform. Using this collateral, the initiative borrowed significant quantities of stablecoins, including USDC and its proprietary USD1 token.
Blockchain intelligence from Arykham verified that a project-controlled wallet deposited 5 billion WLFI tokens on Dolomite as collateral, enabling the withdrawal of approximately $75 million in stablecoins. Subsequently, more than $40 million of these borrowed assets moved to Coinbase Prime.
This borrowing activity maxed out Dolomite’s available lending capacity, creating a situation where other platform users found themselves temporarily locked out from retrieving their deposited assets.
Project Team Addresses Backlash
World Liberty Financial published a series of statements on X pushing back against the criticism. Team representatives characterized the warnings as “FUD” and maintained the project faces no imminent liquidation risk.
“Should market conditions shift dramatically against our position, we would simply provide additional collateral,” the team explained. However, skeptics noted that supplying more WLFI tokens to support a WLFI-backed position on a platform with overlapping advisory relationships only compounds the circular dependency rather than eliminating it.
Adding to the controversy, Corey Caplan, co-founder of Dolomite, simultaneously serves in an advisory capacity for World Liberty Financial, intensifying concerns about potential conflicts of interest among market observers.
According to World Liberty’s disclosures, the project allocated $65.58 million toward repurchasing 435.3 million WLFI tokens over a six-month span, establishing an average acquisition price of $0.1507. With current market prices near $0.078, these treasury holdings reflect approximately 48% in unrealized losses.
Tron Founder Suffers Major Losses
Justin Sun, the founder of Tron, watched his immobilized WLFI holdings plummet by over $11 million in just one day. Sun initially committed $30 million to World Liberty Financial during late 2024 and subsequently accumulated a stake valued near $75 million at peak prices.
World Liberty blacklisted Sun’s wallet address last year following a transfer of approximately $9 million worth of WLFI, effectively freezing his token holdings. According to blockchain analytics provider Bubblemaps, Sun currently holds roughly 545 million frozen WLFI tokens valued at approximately $45 million — representing a decline exceeding $80 million from previous valuations.
An additional 3 billion WLFI tokens remain parked in an intermediary wallet following treasury operations conducted on April 2 and April 7, presently carrying a valuation of approximately $234 million.
Technical indicators show the RSI approaching 30, nearing oversold conditions, while MACD signals suggest ongoing bearish pressure. Immediate support exists at $0.079, with potential downside targets identified at $0.075 and $0.070 should selling momentum persist.
