Chaos Labs: WLFI builds a loop collateralization structure on Dolomite, with the team accounting for 85.3% of the platform’s lending

Gate News message: On April 13, risk management firm Chaos Labs disclosed that the Trump family crypto project WLFI’s lending on Dolomite has been expanding rapidly. WLFI’s collateral utilization is nearing its limit (5.1 billion tokens almost fully used), mainly concentrated in two multisig addresses. Of these, about 3.0 billion WLFI tokens have been pledged and borrowed out as approximately 40.7 million USD1, while the other address builds a circular collateral structure using USD1 and USDC, with the liquidation threshold corresponding to a WLFI price decline of about 75%. Current USD1 utilization is 83.4%, USDC is 90.19%, and the lending interest rate is about 5%. If the supply rate includes the WLFI rewards obtained via Merkl, it is 10.64% (the event ends within 3 days). At the same time, the WLFI collateral size exceeds the total tradeable volume of a certain CEX by 4 times, and only 20% of the tokens are unlocked; the release of the remaining tokens is expected to be decided in mid-April. After the incident, the team repaid about 10 million USD1 and said it can add more collateral. The team currently accounts for 82.7% of Dolomite TVL and 85.3% of its lending. On-chain funds are highly concentrated, and the intended use of the structure has not been clarified.