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- A World Liberty wallet reportedly borrowed $75 million in stablecoins against WLFI tokens and later sent more than $40 million to Coinbase Prime.
- DeFi analysts warned that the WLFI-backed position on Dolomite could become difficult to liquidate cleanly if the token price falls.
A large borrowing position tied to World Liberty is drawing fresh scrutiny after onchain observers flagged both its size and its timing.
According to the details circulating among DeFi researchers, a wallet linked to World Liberty used WLFI tokens as collateral to borrow $75 million in USD1 and USDC on Dolomite. More than $40 million of that was then reportedly transferred to Coinbase Prime, with the movement said to have occurred just hours before Donald Trump’s announcement of a U.S.-Iran ceasefire.
A large collateral position starts to worry lenders
The immediate concern is not simply that the borrowing was big. It is that the collateral behind it may be hard to unwind if markets move the wrong way.
Analysts on X argued that the position creates an elevated risk of bad debt for other lenders on Dolomite, particularly if WLFI falls toward liquidation levels. That is where the structure starts to look fragile. A collateral asset can be marked at a high valuation on paper, but if real market liquidity is thin, liquidation becomes more theory than mechanism.
One researcher, posting under the name EthanDeFi, said the position was effectively “unliquidatable” near stress levels without causing meaningful losses for lenders. The point there is fairly simple. If too much collateral must be sold into too little demand, the protocol may not recover enough value fast enough to protect everyone upstream.
The deeper issue is liquidity, not headline valuation
That distinction matters because WLFI’s reported fully diluted valuation may look large, around $10 billion by the figures cited in the discussion, while actual market depth appears much smaller. In DeFi, that gap can be dangerous.
It means a token may support aggressive borrowing in calm conditions, yet fail badly as collateral during stress.
The Coinbase Prime transfer has also sharpened attention because of its reported timing. Even without drawing conclusions from that alone, the sequence has made lenders more sensitive to counterparty risk around the position. For users with stablecoins lent into Dolomite pools accepting WLFI collateral, the debate has shifted quickly from yield to recoverability.
