World Liberty Financial Token Falls on Unlock Proposal News

TLDR

• WLFI price declined 14% to $0.08 within 24 hours.
• Market capitalization dropped by $427 million to $2.58 billion.
• World Liberty Financial plans a structured token unlock proposal.
• The project holds $400 million in WLFI collateral on Dolomite.
• The team denied liquidation risks and pledged additional collateral if needed.

World Liberty Financial’s (WLFI) governance token dropped sharply after the project outlined a token unlock proposal. The price fell to $0.08, marking a 14% daily decline. At the same time, market capitalization declined by $427 million to $2.58 billion.

World Liberty Financial Token Drops on Unlock Plan

World Liberty Financial confirmed it is preparing a governance proposal to unlock WLFI tokens for early holders. The project said the plan includes a structured vesting schedule to control supply release.

Currently, about 75% of WLFI tokens remain locked and cannot be traded. The team acknowledged “strong demand” from early participants seeking liquidity access.

The token launched as a non-transferable digital asset and later gained a valuation based on limited circulating supply. Public sales distributed around 20% of the total supply to investors.

World Liberty Financial raised $550 million from about 85,000 participants during two token sales. Token Unlocks data valued those distributed tokens at nearly $2 billion on paper.

The team stated that the unlock proposal would not release all tokens at once. It added that a “long-term vesting and unlock schedule” will guide the process.

DeFi Loan Activity Sparks Liquidity Concerns

World Liberty Financial defended its $150 million stablecoin borrowing activity through the Dolomite protocol. The loans are denominated in USDC and backed by WLFI collateral.

Critics raised concerns about liquidity risks tied to WLFI’s limited tradable supply. Some users warned that liquidation events could create losses for liquidity providers.

The project responded by rejecting those concerns and stating, “We are nowhere near liquidation.” It also said it would add more collateral if market conditions changed.

Blockchain data showed the project posted about $400 million in WLFI as collateral. This amount represents nearly 98% of the token’s supply on the platform.

Observers also questioned how the project plans to repay the borrowed stablecoins. Some transactions showed that part of the funds moved to Coinbase Prime accounts.

World Liberty Financial described its borrowing strategy as beneficial for users supplying stablecoins. It stated that users are “earning outsized stablecoin yields right now.”

The Dolomite protocol’s lending pool for USD1 showed high utilization levels. This condition raised questions about borrowing limits and liquidity availability.

Despite concerns, the project maintained that its position remains secure under current conditions. It reiterated that additional collateral could support its loans if required.

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