World Liberty Financial rebuts WLFI Markets' lending concerns amid rising scrutiny

World Liberty Financial (WLFI) has pushed back against recent criticism surrounding its borrowing activity on the WLFI Markets decentralized finance platform.

WLFI pushes back on liquidation risk claims

In a late Thursday X post, the project addressed concerns about its lending position, outlining the structure of its exposure and dismissing fears of potential liquidation.

"We are one of the largest suppliers and borrowers on WLFI Markets. Yes, we supplied WLFI as collateral and borrowed stablecoins. No, we are nowhere near liquidation — and frankly, even if markets moved dramatically against us, we'd simply supply more collateral," the team stated.

WLFI stated that it is a key participant within the protocol, describing its role as an "anchor borrower" that supports overall platform activity. According to the statement, this activity contributes to yield generation for other users.

"By being the anchor borrower, we're generating the yield that makes WLFI Markets compelling for everyone else," WLFI added. 

The team also pointed to performance metrics that support the sustainability of its strategy, including an annual revenue run rate of $159.5 million tied to its USD1 stablecoin. The project added that it has conducted open-market buybacks exceeding 435 million WLFI tokens, worth $65.58 million over the past six months.

The response follows scrutiny after Arkham's on-chain data highlighted the scale of WLFI's borrowing position. Critics have raised concerns about potential risks to lenders, citing limited token liquidity and a high concentration of collateral within the platform. 

Questions have also surfaced regarding repayment of WLFI's loans and the movement of borrowed stablecoins, particularly in the event of significant market volatility.

The controversy has further drawn renewed attention to longer-standing concerns among early token holders. About 75% of the WLFI token supply has remained locked under initial distribution terms.

In response, World Liberty Financial confirmed that it will introduce a governance proposal to address token unlocks. The proposal, expected to be published on the project's forum next week, will seek community input before a formal vote.

It is expected to outline a structured, long-term vesting schedule for early retail participants, rather than a full immediate unlock, to balance liquidity considerations and market stability.

Market sentiment around the token has weakened amid the ongoing debate. WLFI declined 14% over the past 24 hours to $0.0815, wiping roughly $300 million from its market cap.