The native token of a cryptocurrency platform backed by former U.S. President Donald Trump plummeted to a record low this weekend. The decline followed disclosures that the project used billions of its own tokens as collateral to borrow millions in stablecoins. Analysts expressed concerns over the potential market risks associated with this lending strategy.
The WLFI token of the Donald Trump-backed World Liberty Financial platform sank to an all-time low of roughly $0.077 on Saturday. According to market data, the token has fallen 83% from its peak price of $0.46 reached last September.
The downturn came after onchain analysis revealed wallets linked to the project deployed substantial WLFI holdings as collateral on the lending platform Dolomite. Data shows a wallet deposited around 5 billion WLFI tokens and borrowed $75 million in stablecoins.
DeFi analysts warned the large collateral position could create risks for lenders if WLFI’s price falls further. One user wrote on social media about the potential liquidation impact of a token with limited liquidity.
Another user argued that the setup resembled creating artificial “chips” and borrowing cash against them. Dolomite ranks 19th among lending platforms by total value locked, according to industry data.
World Liberty Financial acknowledged the lending activity on social media but sought to calm markets. The project stated its positions remain well above liquidation thresholds and described itself as an “anchor borrower.”
“Everyday users are earning outsized stablecoin yields right now — at a time when traditional markets are offering very little. That’s the whole point,” the project wrote. It also announced a future governance proposal to create a phased unlock schedule for WLFI tokens held by early retail buyers.
