I noticed that the WLFI token has dropped to $0.07 — it’s already 48% below the average price at which the team bought back the tokens half a year ago. Over the past 24 hours, it has fallen another 12%, and this isn’t just a coincidence.

It turns out that World Liberty Financial uses its own WLFI as collateral for stablecoin loans on the Dolomite platform. When I read their explanation, I realized it’s a closed loop: they borrow stablecoins backed by their own token, promise to add even more WLFI if something goes wrong, but at the same time, the token’s price keeps dropping. In other words, the collateral becomes weaker, not stronger.

The most interesting part is that they have already transferred an additional 3 billion tokens to an intermediate wallet. If these tokens are also used as collateral on Dolomite, the situation will become even more tense. Concentrating risk in a single falling asset is a red flag. Plus, regular depositors can no longer withdraw funds from the pool because it’s nearly emptied.

When I look at this situation, I see a classic example of how a loan backed by its own token can quickly fall apart if the price starts to decline. The token has dropped from $1.10 to $0.05–$0.07, and every further drop makes the position more vulnerable. This is something worth monitoring closely.