- World Liberty Finance has expanded borrowing on Dolomite to near its WLFI collateral cap, with roughly 3 billion WLFI backing about $40.7 million in stablecoins.
- Chaos Labs said the position now accounts for 82.7% of Dolomite’s TVL and 85.3% of total borrowing, leaving activity heavily concentrated.
World Liberty Finance has pushed its Dolomite borrowing position close to the protocol’s limits, raising fresh questions about concentration risk, collateral quality and how much stress the system could absorb if conditions turn.
According to Chaos Labs, WLFI has rapidly expanded its use of the lending platform through two multisigs, bringing collateral usage near the protocol’s 5.1 billion WLFI cap. Roughly 3 billion WLFI now backs around $40.7 million in borrowed stablecoins, most of it in USD1, with the setup relying in part on a USD1-USDC leverage loop.
A single borrower now dominates Dolomite activity
That is the part that stands out. Chaos Labs said World Liberty’s activity now represents 82.7% of Dolomite’s total value locked and 85.3% of total borrowing. In other words, this is no longer just a large user on the protocol. It is, for practical purposes, the protocol’s center of gravity.
The borrowing structure also looks fairly tight. The reported liquidation threshold is about 75%, while USD1 utilization has climbed to 83.4% and USDC utilization to 90.19%. Borrow rates are near 5%, with supply rates at 10.64% once Merkl rewards are included, though those rewards are due to end in three days.
Collateral scale outpaces market liquidity
Chaos Labs also pointed to a deeper issue around collateral depth. The WLFI posted on Dolomite reportedly exceeds Binance’s tradable supply by four times, while only about 20% of the token is unlocked.
That creates an obvious tension. A collateral asset can support borrowing cleanly when markets are calm, but if too much of it needs to be sold during stress, real liquidity may not match balance sheet assumptions.
World Liberty has reportedly repaid about $10 million and may add more collateral, which suggests the team is not ignoring the risk. Still, the broader concern remains the same. A protocol this concentrated around one borrower, one collateral type and one still-unclear purpose is carrying a structure that leaves very little room for surprise.
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