A day after the Trump-affiliated cryptocurrency company created a discussion on X justifying its lending stance on Dolomite—the DeFi protocol whose co-founder advises WLFI—the WLFI token dropped almost 12%. At the time of writing, WLFI is trading at $0.07910, down 22.98% in the last 30 days as per data from CMC.
Risky Self-Collateral Lending Moves
The revelation that WLFI had used its own governance token as collateral, borrowed stablecoins to secure the deposits, and depleted the USD1 lending pool to the point that other depositors couldn’t withdraw their funds prompted the discussion. WLFI said that the posture was advantageous and deliberate.
Instead of addressing the issue brought up in previous coverage by a prominent news outlet, the statement brought attention to the fact that WLFI will increase the amount of its own token used as collateral in order to prevent liquidation.
An example of circularity that investors should be aware of is the practice of adding additional WLFI to support a position denominated in WLFI on a protocol advocated by WLFI itself.
WLFI described itself as an “anchor borrower,” whose borrowing helps other users get yield when conventional markets aren’t offering much. During the previous six months, the company bought back 435.3 million WLFI tokens on the open market for $65.58 million, with an average price of $0.1507. Next week, they will publish a governance proposal to release tokens for early holders.
With the token’s recent price drop of about 48% below the repurchase average, WLFI’s own treasury purchases are in a precarious financial position. Since its debut in 2025, WLFI has now reached its lowest level.
Additionally, on April 2 and 7, the treasury transferred three billion WLFI tokens, which are now sitting in an intermediate wallet. At today’s prices, the hoard is worth around $234 million, down from $266 million a week ago.