WLFI token unlock proposal sparks $427M drop after USDC loans

World Liberty Financial (WLFI) faced renewed scrutiny after its WLFI token unlock proposal surfaced alongside details of large DeFi borrowing on Dolomite. Observers said WLFI used Dolomite for about $160M in USDC-denominated loans, reviving “FUD” that thin liquidity could lead to liquidation/unwinding and potentially “bad debt” for Dolomite. Critics also highlighted concentration risk. Arkham Intelligence reportedly found roughly $400M of WLFI posted as Dolomite collateral across two wallets—about 98% of WLFI supply on that venue—meaning WLFI is the majority of collateral securing the loans. WLFI’s defenders denied liquidation concerns, saying it is “nowhere near liquidation” and would add collateral if needed, while arguing the strategy boosts stablecoin yields for Dolomite’s suppliers. The debate matters for trading because WLFI rejected calls for clarity on repayment specifics, while WLFI token unlock access is still gradual: around 75% of WLFI supply remains locked. WLFI price sold off, falling to around $0.08 (down ~14% day over day) and cutting market cap by about $427M to roughly $2.58B, with traders likely to keep price-sensitive reaction around the WLFI token unlock proposal while liquidation/repayment details remain unclear. Key keywords: WLFI token unlock proposal, DeFi lending, USDC loans, Dolomite, liquidation risk.