World Liberty Financial, the crypto firm co-founded by the Trump family, has executed a series of transactions through the decentralized finance protocol (DeFi) Dolomite, raising questions about insider access, circular token economics and concentrated risks for other depositors.
Onchain records analyzed by CoinDesk, sourced from Etherscan, Arkham and publicly available wallet data, show the streak started on February 8, when $WLFI‘s treasury deposited 14 million $USD1its own dollar-pegged stablecoin, in Dolomite as collateral and borrowed 11.4 million $USDC against it.
Minutes later 11.45 million $USDC moved to a Coinbase Prime deposit address, per Arkham. Two days later 12.5 million $USD1 was sent from the treasury to a separate Coinbase Prime deposit address. Coinbase Prime is typically used for converting crypto to fiat or for institutional OTC trading.
Those 12.5 million $USD1 was not borrowed from Dolomite. It moved straight from $WLFI‘s Treasury wallet went public, which meant the company was sending its own stablecoin straight to a fiat-off disaster.
But the $WLFI token entered the picture twelve days later. On February 20, the treasury deposited 890 million euros $WLFI in Dolomites and borrowed 20 million $USD1 against it.
Another 1.1 billion on March 24 $WLFI followed. A total of 1.99 billion $WLFI tokens are now collateralized in Dolomite, and the Treasury has received approximately 31.4 million worth of stablecoins from the protocol in both episodes.
However, the choice of the protocol is not accidental.
Dolomite co-founder Corey Caplan is an advisor to World Liberty Financial. $WLFI now tops Dolomite’s delivered assets list with $458.9 million in supply liquidity, approximately 55% of the protocol’s total of $835.7 million.
The structural problem is located in the Dolomites $USD1 swimming pool. $USD1which now has $4.6 billion in circulation, ranks second under the protocol with $180 million delivered against $167.5 million borrowed, a utilization ratio of approximately 93%.
The $USD1 the supply rate is 16.24% and the lending rate is 9.18%, figures that reflect concentrated lending activity rather than broad organic demand.
In that practice, ordinary savers borrowed $USD1 at the pole expecting to withdraw at will cannot do so all at once. Their money is effectively frozen until the big borrower pays back.
The collateral to support the $WLFIdenominated loans are a separate issue.
$WLFI transactions with limited market depth relative to the size of the position. If the token moves sharply lower and Dolomite’s liquidation mechanism kicks in, the forced sale would crash the price before the collateral could be settled, leaving the protocol with bad debt that would fall on the same retail depositors currently unable to exit.
The activity escalated in April via a different route. On April 2, the $WLFI treasury sent 2 billion $WLFI to a Gnosis Safe proxy wallet at address 0x44a681DD. Five days later it sent another 1 billion.
Neither transfer went directly to Dolomite, and onchain data doesn’t yet show where these tokens are going. The three billion additional tokens are worth approximately $266 million $WLFIThe current price of $0.0888.
World Liberty Financial did not immediately respond to CoinDesk’s request for comment.