World Liberty Pushes Back On Dolomite Bad Debt Fears Over WLFI Collateral

TLDR

• World Liberty said its Dolomite borrowing position is “nowhere near liquidation.”
• The project used about 5 billion WLFI tokens as collateral on Dolomite.
• It borrowed $75 million in USD1 and USDC against the WLFI collateral.
• More than $40 million was later transferred to Coinbase Prime, onchain data showed.
• World Liberty said a WLFI unlock vote may begin after a governance proposal next week.

World Liberty Financial has defended its borrowing position on Dolomite after social media posts raised bad debt concerns. The Trump-backed crypto project said the position is safe and dismissed liquidation worries as doubts”FUD””.

Onchain data from Arkham showed that a wallet linked to World Liberty deposited about 5 billion WLFI tokens on Dolomite. The wallet then borrowed $75 million in USD1 and USDC. The move drew attention because WLFI makes up a large share of supplied assets on the protocol.

Analysts on X said the position could create problems for lenders if WLFI falls and liquidations begin. World Liberty rejected that view and said it could add more collateral if needed. The project also said its activity helps create higher yields for stablecoin lenders in WLFI markets.

World Liberty answers liquidation concerns

World Liberty said recent claims about its Dolomite activity do not reflect the actual state of its position. The team confirmed it supplied WLFI as collateral and borrowed stablecoins. It also said the account remains well above liquidation levels.

In a thread on X, the team wrote doubts: “We are nowhere near liquidation—and frankly, even if markets moved dramatically against us, we’d simply supply more collateral.” ” The project added that this is part of normal lending activity. It said the borrowing structure is not unusual for decentralized finance markets.

The comments came after onchain observers pointed to the size of the WLFI-backed loan. Arkham data showed that the World Liberty wallet later sent more than $40 million to Coinbase Prime. Reports said the transfer happened hours before President Donald Trump’s U.S.-Iran ceasefire announcement.

That timing led to more public discussion online. Still, the project focused its response on the safety of the position. It said the market reaction was driven by doubts”FUD”” rather than real liquidation danger.

Dolomite exposure draws market attention

Dolomite’s dashboard showed that WLFI accounted for about $428.9 million in supply liquidity. That total represented more than half of the protocol’s $825.4 million in supplied assets. Because of that share, some researchers said the market carries concentration risk.

One X user, EthanDeFi, warned that a large WLFI liquidation could be hard to complete without losses. He pointed to WLFI’s limited liquidity and a fully diluted valuation near $10 billion. He also urged lenders in related pools to review their exposure.

Those concerns spread as WLFI’s market price moved lower. The token fell 5.6% over 24 hours to $0.86 after the debate gained pace. Over seven days, the token remained down 14%, based on pricing data cited in the report.

World Liberty took a different view of the same borrowing activity. It said becoming the anchor borrower on Dolomite helps support lender returns. According to the team, that role can increase yields for users who lend stablecoins in WLFI markets.

Token unlock plan enters focus

Alongside its response, World Liberty also addressed the next phase for WLFI holders. The team said it plans to release a governance proposal next week. That proposal would seek community input on a token unlock process.

The project said the plan would not release all tokens at once. Instead, it would present a phased schedule for early retail buyers. The team said the structure would use long-term vesting and staged unlocks.

World Liberty also pointed to its recent market activity to support confidence in WLFI. The team said it has repurchased more than 435 million WLFI tokens over the past six months. It used that figure to show continued support for the token.

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