Dolomite's total value locked exploded to $6.04 billion yesterday, marking the DeFi platform's highest TVL since May 2025, as WLFI token holders triggered a borrowing spree that emptied USD1 liquidity pools and spiked deposit rates above 30%.

WLFI's Strategic Move Sparks Yield Chaos

A strategic reserve address tied to World Liberty Financial dumped 3 billion WLFI tokens into Dolomite over the past five days, borrowing out 50.44 million USD1 and pushing borrow rates to 30% while draining available liquidity to negative levels. This maneuver, which WLFI launched amid its push for decentralized finance adoption since its debut last year, directly fueled the yield bonanza. Users rushed in, depositing funds to chase the elevated APY, only for rates to cool to around 18% today after liquidity topped up to 8.42 million USD1. Daily fee revenue hit $164,000, underscoring Dolomite's knack for capitalizing on such volatility—much like past TVL spikes tied to high-yield lending mechanics on the platform.

Technical Confluence on WLFI's 4H Chart

As WLFI trades at $0.09, the bearish trend asserts dominance with both the 50-period and 200-period EMAs converging at $0.1, forming a formidable overhead resistance that price has repeatedly failed to breach. MACD confirms this downside pressure through a clear death cross at -0.0, signaling weakening momentum even as RSI hovers neutrally at 38.51, far from oversold territory that might invite bargain hunters. Volatility remains contained within the Bollinger Bands, with price bouncing off the lower support at $0.09 but struggling against the upper band at $0.1—expect a potential exhaustion pullback here, testing that EMA confluence before any reversal attempt, especially if broader crypto macro headwinds persist.

Traders who deposited yesterday now withdraw smoothly across amounts, but the episode highlights risks in chasing such fleeting yields, particularly with WLFI's history of bold reserve strategies since its launch alerts began circulating last year.