World Liberty Financial's strategic reserve wallet has raised concerns in the DeFi system after borrowing USD1 over 50 million dollars from Dolomite, which is a lending platform powering its own World Liberty Markets.
The data on the chain confirms that WLFI's reserve fund has deposited approximately 3 billion WLFI governance tokens as collateral over a period of 5 days, along with borrowing USD1 of 50.44 million dollars, resulting in the pool utilization exceeding 100%. The liquidity has thus become negative at -232,000 tokens, which means that the supply of USD1 on the platform is completely depleted at this time.
What is the background of this movement?
The consequence is that the deposit interest rate for lenders of USD1 surged to 35.81% per annum, while the borrowing cost reached 30%.
In the DeFi lending market, such events often occur when the demand for borrowing exceeds the available supply, and this time the project's treasury itself is the sole catalyst for this surge.
A project related to the Trump family launched World Liberty Markets in January 2026 through a partnership with Dolomite.
USD1, which is a stablecoin pegged to USD and backed by U.S. government bonds and cash-equivalent assets, has a market value growing to approximately 3.5 billion USD by early 2026.
The motivation behind the treasury's proactive borrowing may range from the need for internal liquidity to accelerating on-chain activity and increasing the number of locked assets.
The WLFI token used as collateral currently accounts for more than half of the total TVL in Dolomite's market.
Why is this important?
On-chain analysts say that investors chasing a 35% return may not be able to withdraw funds for a while until a large borrowing position is unlocked.
Currently, the borrowing rate on Dolomite is 30% and everything is fully borrowed. Liquidity shows a negative -232,000 tokens, but if you want to earn interest there, you also have to consider when you can withdraw USD1. Written by an analyst.
Community feedback has been compared to the speculative loop that previously led to the collapse problems of DeFi in the past.
If the price of the WLFI token drops significantly, positions with collateral exceeding the net value may be at risk of being liquidated and could trigger a chain reaction to other pools.
The high yield is real but reflects an artificially created scarcity by a single insider entity, not a naturally occurring demand in the market. Therefore, all participants should monitor real-time pool data on Dolomite and act with caution.