World Liberty Financial Proposes 62B WLFI Token Unlock With 4.5B Burn Amid Dolomite Lending Controversy
Summary
World Liberty Financial, the Trump family-backed DeFi venture, published a governance proposal on April 15 to restructure more than 62 billion locked WLFI tokens, introducing multi-year vesting schedules and a mandatory 4.5 billion token burn for insiders — a move that arrives days after onchain records revealed the project borrowed $75 million in stablecoins through a lending protocol co-founded by one of its own advisers.
The proposal splits holders into two tiers. Early supporters holding 17 billion WLFI would face a two-year cliff followed by two years of linear vesting, with no burn. Founders, team members, advisers, and partners holding 45.2 billion tokens would accept stricter terms: a two-year cliff, three-year vest, and a 10% burn upon opting in. Participation is voluntary within a 10-day window; holders who decline remain locked indefinitely. A seven-day Snapshot vote requires a 1 billion WLFI quorum to pass.
The timing is deliberate. According to CoinDesk, onchain data shows the WLFI treasury deposited 5 billion of its own tokens as collateral on Dolomite, a lending protocol advised by WLFI insider Corey Caplan, to borrow $75 million in stablecoins subsequently routed to Coinbase Prime. That borrowing pushed Dolomite’s USD1 pool to roughly 93% utilization, effectively trapping depositors. WLFI dropped nearly 10% to record lows as analysts flagged that any forced liquidation of the thinly traded collateral could saddle the protocol with bad debt.
Critics were swift. DeFi commentator Ignas argued early investors would only receive unlocked tokens after the current administration leaves office and the token’s value has collapsed. Others raised the prospect of class-action lawsuits. World Liberty Financial did not respond to critics, stating the proposal represents a long-term governance alignment signal.
The formal vote is expected this week, with the outcome shaping both WLFI’s supply trajectory and the broader debate over insider access in politically connected DeFi projects.