🚨 Trump-Linked Firm's Loan Sparks Protocol Liquidity Crisis
World Liberty Financial (WLFI), a firm linked to former President Donald Trump, borrowed $75 million in stablecoins from the Dolomite lending protocol using its own token as collateral. According to on-chain data cited by Coinindesk, WLFI deposited 5 billion WLFI tokens to secure the loan, which was then sent to CoinBase Prime.
This transaction pushed the lending pool to 100% utilization, effectively locking depositors' funds and preventing withdrawals. A Dolomite advisor also co-founded the protocol from which the loan originated.
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anyone trying to chase this yield should know
recently, wlfi team deposited 5b $wlfi tokens (worth ~$450m) across two wallets as collateral on dolomite:
> 0x44a...5fad deposited 3b wlfi and borrowed $50m usd1 + $10m usdc, paying 1.35% apr on the borrowed funds
> 0x5be...7dbb deposited $110m usd1, 19k eth, and $22m usdc, then borrowed $89m usdc
they recycled this $89m + $10m usdc (their own deposit) and retrieved their $110m usd1, effectively earning 2.76% on net left asset value
the team also added 2b wlfi tokens (part of the 5b) to the same pool, boosting collateral and enabling them to borrow even more stablecoins
this generates an artificial apy, the team earns yield on stablecoins through a recycling loop, offsetting the negative yield
if $wlfi crashes, the protocol (lenders) could be left with bad debt, the risks seem to be much higher than the reward here
anyone trying to chase this yield should know
recently, wlfi team deposited 5b $wlfi tokens (worth ~$450m) across two wallets as collateral on dolomite:
> 0x44a...5fad deposited 3b wlfi and borrowed $50m usd1 + $10m usdc, paying 1.35% apr on the borrowed funds
> 0x5be...7dbb deposited $110m usd1, 19k eth, and $22m usdc, then borrowed $89m usdc
they recycled this $89m + $10m usdc (their own deposit) and retrieved their $110m usd1, effectively earning 2.76% on net left asset value
the team also added 2b wlfi tokens (part of the 5b) to the same pool, boosting collateral and enabling them to borrow even more stablecoins
this generates an artificial apy, the team earns yield on stablecoins through a recycling loop, offsetting the negative yield
if $wlfi crashes, the protocol (lenders) could be left with bad debt, the risks seem to be much higher than the reward here
