Overview
Dolomite is a decentralized finance (DeFi) lending protocol. It became central to the World Liberty Financial controversy when WLFI used it to borrow ~$75 million against its own tokens. Dolomite co-founder Corey Caplan is an adviser to WLFI.
Key Facts
- Co-founded by Corey Caplan, who is also an adviser to World Liberty Financial Trump’s World Liberty Financial uses five billion WLFI to borrow $75 million
- WLFI constitutes ~55% of Dolomite’s $835.7M total value locked (TVL) Trump’s World Liberty Financial uses five billion WLFI to borrow $75 million
- USD1 pool hit ~93% utilization, effectively trapping retail depositors Trump’s World Liberty Financial uses five billion WLFI to borrow $75 million
Newsletter Relevance
Dolomite illustrates how DeFi’s permissionless architecture can be exploited by connected insiders. The protocol’s inability to prevent a single entity from dominating its TVL and trapping other depositors is a governance failure that undermines DeFi’s decentralization claims.
Connections
- World Liberty Financial — dominant depositor and borrower
- Corey Caplan — co-founder of Dolomite and WLFI adviser
- Coinbase — borrowed funds were sent to Coinbase Prime as fiat off-ramp
Source Appearances
- Trump’s World Liberty Financial uses five billion WLFI to borrow $75 million — lending platform used for WLFI’s borrowing operation
Open Questions
- Does Dolomite’s governance structure have any mechanism to limit concentration risk from a single depositor?
- What happens to retail depositors if WLFI’s collateral (its own token) is liquidated?