Key Highlights
- WLFI plummeted 12% in 24 hours, reaching an all-time low since debut
- The project deposited billions of its native tokens as collateral on Dolomite protocol to secure stablecoin loans
- The large-scale borrowing exhausted Dolomite’s USD1 liquidity, preventing user withdrawals
- Tron’s Justin Sun suffered more than $11 million in paper losses on his frozen token position in one day
- Treasury token repurchases now show approximately 48% unrealized losses
The World Liberty Financial governance token experienced a sharp 12% decline over 24 hours, plunging to its lowest valuation since its 2025 debut. The digital asset traded around $0.0818, compounding weekly declines of 15% and monthly losses totaling 17%.
The downturn intensified following a CoinDesk investigation revealing that World Liberty Financial had pledged billions of its native governance tokens as security on the Dolomite lending platform. Using this collateral base, the organization obtained tens of millions in stablecoins, including 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, generating approximately $75 million in stablecoin borrowings. Subsequently, more than $40 million of these borrowed assets were moved to Coinbase Prime.
The massive borrowing activity saturated Dolomite’s available lending capacity. This development temporarily prevented other platform users from accessing their deposited capital.
World Liberty’s Defense Against Backlash
World Liberty Financial published a detailed thread on X addressing the mounting criticism. The organization dismissed the concerns as “FUD” and emphasized that the project remained “nowhere near liquidation.”
“Even if markets moved dramatically against us, we’d simply supply more collateral,” the project team explained. However, skeptics noted that pledging additional WLFI tokens to support an already WLFI-backed position on a platform where a WLFI advisor holds influence only compounds the circular dependency rather than mitigating it.
The situation drew additional scrutiny due to Corey Caplan, Dolomite’s co-founder, simultaneously serving as an advisor to World Liberty Financial—raising questions about potential conflicts of interest among industry observers.
According to WLFI’s disclosures, the project allocated $65.58 million to repurchase 435.3 million WLFI tokens at an average cost of $0.1507 throughout a six-month period. With current trading prices hovering near $0.078, these repurchase operations now reflect approximately 48% in unrealized losses.
Justin Sun’s Substantial Losses
Tron blockchain founder Justin Sun experienced paper losses exceeding $11 million on his locked WLFI allocation within just 24 hours. Sun initially committed $30 million to World Liberty Financial during late 2024 and subsequently expanded his holdings to a peak valuation around $75 million.
World Liberty blacklisted Sun’s address in the previous year following a transfer of roughly $9 million worth of WLFI, effectively freezing his token holdings. Analysis from blockchain research firm Bubblemaps suggests Sun currently controls approximately 545 million immobilized WLFI tokens valued near $45 million—representing a decline of over $80 million from previous assessments.
An additional three billion WLFI tokens remain stored in an intermediary address following treasury operations conducted on April 2 and April 7, presently valued at roughly $234 million.
Technical indicators show the RSI approaching 30, nearing oversold conditions, while the MACD signals persistent bearish momentum. Immediate support appears at $0.079, with potential downside objectives at $0.075 and $0.070 should selling pressure persist.
