One of the early investors in World Liberty Financial (WLFI), the cryptocurrency project launched by US President Donald Trump and his family, claimed yesterday that the only way to recoup losses is to open a short position in WLFI.
Following these statements, WLFI, which has been in the spotlight, is back in the news today due to liquidation concerns. WLFI is facing liquidation concerns related to a loan it took out using WLFI tokens as collateral on Dolomite, but the WLFI team has denied these concerns.
The WLFI team dismissed concerns that the large debt position in the decentralized finance protocol Dolomite could trigger liquidation proceedings, labeling them as FUD (Fear, Uncertainty, and Doubt).
WLFI stated in a post on its official X account that it had borrowed stablecoins on Dolomite using WLFI tokens as collateral, but dismissed liquidation concerns as unfounded.
The team stated that market concerns regarding collateralized lending on the WLFI Market were based on misinformation. The project said it is one of the largest borrowers using WLFI as collateral to borrow stablecoins, but is far from the point of liquidation. They also added that even in extreme market volatility, they have sufficient capacity to deposit additional collateral and are not facing liquidation risk.
World Liberty had previously invested approximately 5 billion WLFI tokens in Dolomite and borrowed approximately $75 million worth of USD1 and USDC in return. Of this total, $40 million was transferred to Coinbase Prime.
This large debt position, backed by WLFI, has raised concerns in the community. Analysts argue that if the collateral lacks sufficient liquidity, losses incurred during liquidation could also affect other depositors.
A DeFi analyst speaking to The Block said that if the position approaches the liquidation point, it will be difficult to close it without significant losses. With WLFI liquidity remaining low, the release of tokens representing approximately 5% of the total supply could trigger a sharp price drop.
World Liberty also hinted at a long-awaited token unlock event for early adopters, stating it plans to release a governance proposal next week to solicit feedback from the community, followed by a formal vote shortly afterward.
WLFI stated that not all tokens would be distributed at once, adding that the plan was designed with the long-term health of the ecosystem in mind.
WLFI prices have fallen 11% in the last 24 hours to $0.81, and their losses over the past seven days have exceeded 17%.
*This is not investment advice.
