World Liberty Financial, the crypto firm co-founded by the Trump family, has executed a series of transactions through the Dolomite decentralized finance (DeFi) lending protocol, raising questions about internal access, the circular economy of tokens, and concentrated risk to other depositors.
On-chain records analyzed by CoinDesk, obtained from Etherscan, Arkham, and publicly accessible wallet data, show that the sequence began on February 8, when WLFI’s treasury deposited $14 million, its own dollar-pegged stablecoin, in Dolomite as collateral and borrowed $11.4 million against it.
Minutes later, 11.45 million USDC was moved to a Coinbase Prime deposit address, according to Arkham. Two days later, $12.5 million was sent from the treasury to a separate Coinbase Prime deposit address. Coinbase Prime is typically used to convert cryptocurrencies to fiat or for institutional OTC trading.
Those $12.5 million1 were not lent by Dolomite. It went directly from WLFI’s treasury wallet to the exchange, meaning the company sent its own stablecoin directly to a fiat off-ramp.
But the WLFI token came into the picture twelve days later. On February 20, the Treasury deposited 890 million WLFI in Dolomite and borrowed $20 million1 against it.
On March 24, another 1.1 billion WLFI followed. In total, 1.99 billion WLFI tokens are now held as collateral within Dolomite, and the treasury has received approximately 31.4 million in stablecoins from the protocol in both episodes.
However, the choice of protocol is not accidental.
Dolomite co-founder Corey Caplan is an advisor to World Liberty Financial. WLFI now sits at the top of Dolomite’s supplied asset list with $458.9 million in supply liquidity, roughly 55% of the protocol’s $835.7 million total.
The structural concern lies in Dolomite’s $1 fund. USD1, which now has $4.6 billion in circulation, ranks second on the protocol with $180 million supplied versus $167.5 million lent, a utilization rate of approximately 93%.
The $1 supply rate stands at 16.24% and the borrowing rate at 9.18%, figures that reflect concentrated borrowing activity rather than broad organic demand.
In that use, the common depositors who lent $1 to the common fund hoping to withdraw it at will cannot do so all at once. Your funds are effectively blocked until the large borrower pays up.
The collateral backing the loan called WLFI is a separate issue.
WLFI operates with limited market depth relative to position size. If the token drops sharply and Dolomite’s liquidation mechanism is activated, the forced sale would collapse the price before the collateral can be canceled, leaving the protocol with bad debts that would fall on the same retail depositors who are currently unable to exit.
Activity increased in April through 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, he sent another billion.
No transfers went directly to Dolomite and the on-chain data does not yet show where those tokens are headed. The additional three billion tokens are worth approximately $266 million at the current WLFI price of $0.0888.
World Liberty Financial did not immediately respond to CoinDesk’s request for comment.
