World Liberty Financial, a company known for its ties to former US president Donald Trump, has minted $25 million worth of USD1 stablecoin after a freeze incident on the decentralized finance (DeFi) platform Dolomite. On the same day, the firm permanently removed $3 million worth of USD1 tokens from circulation. Blockchain data reveals all these operations were executed through WLFI’s TokenGovernor smart contract.
Moves to manage a liquidity crunch
Last week, World Liberty Financial announced that it had borrowed $75 million from the Dolomite protocol using its own governance token as collateral and had repaid $25 million of this debt. The company used billions of its WLFI tokens as security to acquire the stablecoins, a portion of which was then transferred to its Coinbase Prime wallet. These actions pushed Dolomite’s USD1 lending pool to near capacity, leaving other users unable to withdraw their assets.
The new USD1 minting took place via BitGo Custody, while the $3 million worth of burned tokens were first gathered in the TokenGovernor smart contract before being sent to a null address, effectively destroying them on the market.
Prior to the major issuance, a series of small trial transactions—$10, $10,000, and $40,800 in USD1—were sent to an inactive wallet. These preliminary transfers were interpreted as routine test steps to verify wallet functionality.
Active stablecoin management amid uncertainty
As a result of these operations, the net supply of USD1 in the market increased by $22 million. The concurrent minting and burning of tokens on the same day signals a hands-on and tightly controlled approach to managing token supply.
However, the origins of the $3 million in USD1 withdrawn from the market, and the reasons for not recirculating it, remain unclear. While token burns tied to collateral returns are commonplace in the sector, World Liberty Financial has yet to comment on this particular issue.
Since these Dolomite-related developments came to light, the value of WLFI’s governance token has dropped by about 15%. It is also known that Corey Caplan, a co-founder of Dolomite, serves as an advisor to World Liberty Financial. It remains uncertain whether these recent moves are intended for use in company reserves, the liquidity pool, or for another undisclosed purpose.
No official statement has yet been made by the company regarding the latest events.
