Chaos Labs: WLFI Team's Cyclical Lending Pushes Collateral Utilization Rate Close to Limit

Chaos Labs stated that the World Liberty Finance team has recently significantly increased lending operations on the Dolomite protocol, causing the collateral utilization rate of WLFI tokens to approach the limit of 510 million tokens. This primarily involves two multi-signature wallets: address 0x44a6 has collateralized 300 million WLFI (approximately $242 million) and borrowed around $40.7 million in stablecoins; address 0x5be9 has borrowed $111 million USD1 and $89 million USDC through a cyclical structure, using USD1 for re-collateralization to borrow USDC again. Under the current structure, WLFI would need to drop by approximately 75% to trigger liquidation. The team has repaid about $10 million USD1 and stated that they will add collateral if necessary. As of now, World Liberty Finance accounts for 82.7% of Dolomite's total supply and 85.3% of total lending volume.