WLFI Defends Dolomite Borrow Amid Insider Access Allegations

Crypto venture World Liberty Financial (WLFI) has responded to allegations of insider access and depositor risk associated with its $31M borrow from DeFi lending protocol Dolomite. WLFI confirmed that it deposited 1.99 billion of its own governance tokens as collateral and borrowed approximately 31.4 million in stablecoins, but disputed the characterization of the position as a risk to the protocol or its users.

The company cited its role as an anchor borrower on the protocol as a yield-generating mechanism for other users, with $65M in token buybacks and a revenue run rate of $159.5 million for USD1. WLFI also highlighted recent technical upgrades to USD1, including gasless transfers and native support for AI payment protocol infrastructure.

However, concerns remain regarding the high utilization ratio of the USD1 lending pool on Dolomite, which currently sits at 88%. This means that retail depositor exits are restricted, with funds locked until the large borrower repays. DeFi analyst Ignas flagged this as a potential systemic concern, drawing comparisons to conditions that preceded the Stabble protocol's collapse.