WLFI Token Plunges 83% From Peak as Self-Collateral Lending Scheme Draws Fire

WLFI Slides to $0.077 — Down 83% From September Highs

The token of Trump family-affiliated DeFi platform World Liberty Financial (WLFI) plummeted to $0.077 on April 11, marking a decline of approximately 83% from its $0.46 peak reached in September 2025. The selloff intensified after details emerged about the project's borrowing operations, which have drawn sharp criticism from market participants.

Why This Matters

World Liberty Financial is among the most high-profile DeFi projects directly tied to political figures. Questions about the transparency of its financial operations carry implications far beyond a single token — they affect how regulators and the public perceive the entire decentralized finance sector. The revealed borrowing structure has raised fundamental concerns about whether a project can sustainably finance itself using self-issued assets as collateral, a practice critics have labeled "circular financing."

Inside the Borrowing Structure

According to disclosed details, World Liberty Financial's treasury borrowed approximately $75 million in stablecoins — including its own stablecoin, USD1 — through the DeFi lending protocol Dolomite. The collateral backing these loans consisted of 5 billion WLFI tokens controlled by the project's own team. Following the revelations, the token's price dropped more than 10%, erasing hundreds of millions of dollars in market capitalization.

The choice of lending venue raised additional red flags. Dolomite co-founder Corey Caplan simultaneously serves as an advisor to World Liberty Financial. The protocol itself ranks just 19th among decentralized lending platforms with a total value locked (TVL) of $147.6 million, according to DeFiLlama. By comparison, sector leaders Aave and Morpho hold $25.3 billion and $7.5 billion in TVL, respectively.

Key Criticisms From the Community

Market observers have flagged several troubling aspects of the arrangement:

• Circular financing — The project is effectively borrowing against an asset it controls, enabling liquidity extraction without raising external capital.
• Conflict of interest — A WLFI advisor co-founded the very protocol facilitating these loans.
• Concentration risk — Placing a massive WLFI position in a relatively small protocol creates dangerous dependency between the lender and a single borrower.
• Thin market depth — Despite a $2.5 billion market cap, WLFI's actual liquidity remains shallow. One critic emphasized that liquidating even 5% of the total supply could trigger a catastrophic price collapse.

World Liberty Financial Pushes Back

The project dismissed the concerns, asserting that its collateral position faces no liquidation risk and would be reinforced if necessary.

"We are one of the largest suppliers and borrowers on WLFI Markets. Yes, we supplied WLFI as collateral and borrowed stablecoins. No, we are nowhere near liquidation — and frankly, even if markets moved dramatically against us, we'd simply supply more collateral. That's not a…" — WLFI (@worldlibertyfi), original post

The team characterized itself as an "anchor borrower" that generates outsized yields for other protocol participants. Additionally, World Liberty Financial announced that WLFI investors will soon be able to vote on a proposal to revise the token unlock schedule. Early investors may gain access to their holdings sooner than originally planned.

In February, the project had unveiled plans to launch World Swap, a platform designed for currency exchange and remittances.