🐦 WLFI may have just unlocked a new level of crypto engineering.
The Trump-linked project reportedly posted around 5 billion WLFI tokens as collateral on Dolomite and borrowed roughly $75 million in stablecoins, including USD1 and USDC.
Then more than $40 million of those borrowed funds was reportedly sent to Coinbase Prime.
That is where the whole structure starts looking ugly.
The borrowing pushed Dolomite’s USD1 pool to extreme utilization, with multiple reports saying other users were temporarily unable to withdraw liquidity.
Critics are calling it a circular setup: use your own token as collateral, borrow against it, and do it through infrastructure tied to people already close to the project.
That does not look like clean DeFi innovation.
It looks like a structure built to squeeze external liquidity out of an internally controlled asset.
If this is the future of “aligned incentives,” then DeFi is getting way too comfortable with insider geometry.