Key Highlights
- WLFI dropped around 15% in a day after its treasury borrowed $75 million, taking the token to hit an all-time low.
- Over $40 million of borrowed funds moved to Coinbase Prime wallets, triggering speculation and forced liquidations.
The governance token of World Liberty Financial ($WLFI) fell around 15% over the past day, hitting an all-time low of around $0.082, as reported by CoinMarketCap. The activity was a result of the project treasury’s $75 million borrowing move on the Dolomite lending protocol.
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According to blockchain analytics platform Arkham Intelligence, World Liberty Financial deposited around 5 billion WLFI tokens, valued at about $440-$460 million at the time, as collateral to borrow around $75 million in stablecoin, including $65.4 million in USD1 and $10.3 million in USDC.
Some portions of the borrowed funds, more than $40 million, were transferred to Coinbase Prime wallets, which raised a question about the intended use of capital.
The move triggered concerns among investors, leading to forced liquidations and further downward pressure on the token’s price.
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WLFI defends the move
The borrowing activity has ignited an intense debate in the community. World Liberty Financial has defended the move, stating it remains “nowhere near liquidation” and emphasizing that the move supports broader ecosystem goals, including stablecoin growth.
The project has previously conducted open-market buybacks of WLFI and highlighted revenue from its USD1 stablecoin, which now exceeds $4 billion in circulation.
Market context
At the time of writing this, WLFI was trading at around $0.08206, being 15% lower in the past day, having an overall market capitalization of around $2.6 billion. The 24-hour trading volume surged to $318.54, indicating increased market activity amid the sell-off.
The fully diluted valuation sat at $8.2 billion, having a circulating supply of around 31.76 billion WLFI out of an overall maximum supply of 100 billion.
Community sentiment on the platform remained mixed, with bullish votes surpassing bearish ones in the recent polls; however, the price action tells a different story. The token has now declined over 82% from its all-time high of $0.46 witnessed in September and has recorded a new all-time low.
Broader outlook
The self-collateralized borrow of World Liberty Financial for $75 million has shed light on weaknesses within not only the economics but also the DeFi platform selected by the project.
Although the treasury claims that such a decision is wise financial management, the dramatic decline in value shows how worried investors are about possible liquidations or other internal conflicts. With this Trump-connected project going through some early hiccups in the DeFi world, one can see what happens next to $WLFI.
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