Concerns over insider access, circular token economics, and concentrated risk to other depositors have been raised by a series of transactions completed by World Liberty Financial, the crypto venture co-founded by the Trump family, using the decentralized finance (DeFi) lending protocol Dolomite.
The series of events started on February 8th, according to onchain records obtained via Etherscan, Arkham, and publicly available wallet data, when the WLFI treasury borrowed 11.4 million USDC against Dolomite and deposited 14 million USD1, its dollar-pegged stablecoin.
Arkham reports that 11.45 million USDC were transferred to a Coinbase Prime deposit account shortly after. A distinct Coinbase Prime deposit address received 12.5 million USD1 two days thereafter from the treasury. Crypto to fiat currency conversions and institutional over-the-counter trading are two common uses for Coinbase Prime.
There was no borrowing of 12.5 million USD from Dolomite. A currency off-ramp was bypassed as the venture’s stablecoin went straight from WLFI’s treasury wallet to the exchange. Twelve days later, however, the WLFI token became involved. The treasury borrowed twenty million USD1 and put 890 million WLFI into Dolomite on February 20.
An additional 1.1 billion WLFI were added on March 24. Throughout both instances, the protocol has sent about 31.4 million stablecoins to the treasury, and a total of 1.99 billion WLFI tokens are currently held as collateral within Dolomite. The choice of protocol is not incidental, however.
World Liberty Financial counts Corey Caplan, co-founder of Dolomite, among its advisors. With $458.9 million in supply liquidity, or almost 55% of the protocol’s total $835.7 million, WLFI is currently the biggest supplied-assets player in Dolomite.
Serious Liquidity Concerns
The main USD1 pool is where the structural worry resides. With $4.6 billion in circulation, USD1 ranks second on the protocol, with $180 million given and $167.5 million borrowed, for a utilization ratio of around 93%. Rather than reflecting widespread organic demand, the USD1 supply rate is 16.24% and the borrow rate is 9.18%.
Ordinary depositors who put $1 into the pool with the intention of withdrawing it whenever they want will be unable to do so at that time. They will not be able to access their funds until the major borrower pays back. A distinct issue is the collateral supporting the WLFI-denominated borrow.
There has been no confirmation that any of these transfers reached Dolomite, and the onchain data does not yet reveal their final destination. At the present price of $0.0888 per WLFI, the three billion additional tokens are worth around $266 million.Concerns over insider access, circular token economics, and concentrated risk to other depositors have been raised by a series of transactions completed by World Liberty Financial, the crypto venture co-founded by the Trump family, using the decentralized finance (DeFi) lending protocol Dolomite.
The series of events started on February 8th, according to onchain records obtained via Etherscan, Arkham, and publicly available wallet data, when the WLFI treasury borrowed 11.4 million USDC against Dolomite and deposited 14 million USD1, its dollar-pegged stablecoin.
Arkham reports that 11.45 million USDC were transferred to a Coinbase Prime deposit account shortly after. A distinct Coinbase Prime deposit address received 12.5 million USD1 two days thereafter from the treasury. Crypto to fiat currency conversions and institutional over-the-counter trading are two common uses for Coinbase Prime.
There was no borrowing of 12.5 million USD from Dolomite. A currency off-ramp was bypassed as the venture’s stablecoin went straight from WLFI’s treasury wallet to the exchange. Twelve days later, however, the WLFI token became involved. The treasury borrowed twenty million USD1 and put 890 million WLFI into Dolomite on February 20.
An additional 1.1 billion WLFI were added on March 24. Throughout both instances, the protocol has sent about 31.4 million stablecoins to the treasury, and a total of 1.99 billion WLFI tokens are currently held as collateral within Dolomite. The choice of protocol is not incidental, however.
World Liberty Financial counts Corey Caplan, co-founder of Dolomite, among its advisors. With $458.9 million in supply liquidity, or almost 55% of the protocol’s total $835.7 million, WLFI is currently the biggest supplied-assets player in Dolomite.
Serious Liquidity Concerns
The main USD1 pool is where the structural worry resides. With $4.6 billion in circulation, USD1 ranks second on the protocol, with $180 million given and $167.5 million borrowed, for a utilization ratio of around 93%. Rather than reflecting widespread organic demand, the USD1 supply rate is 16.24% and the borrow rate is 9.18%.
Ordinary depositors who put $1 into the pool with the intention of withdrawing it whenever they want will be unable to do so at that time. They will not be able to access their funds until the major borrower pays back. A distinct issue is the collateral supporting the WLFI-denominated borrow.
There has been no confirmation that any of these transfers reached Dolomite, and the onchain data does not yet reveal their final destination. At the present price of $0.0888 per WLFI, the three billion additional tokens are worth around $266 million.