Chaos Labs discloses high concentration of WLFI collateral cycle and Dolomite lending

Foresight News reports that risk management firm Chaos Labs posted on Twitter stating that the Trump family's crypto project WLFI has seen a rapid expansion in lending activity on Dolomite, pushing WLFI's collateral utilization rate close to its upper limit (5.1 billion tokens nearly exhausted), mainly concentrated in two multisig addresses. Of these, around 3 billion WLFI have been collateralized to borrow approximately 40.7 million USD1, while another address has built a circular collateral structure using USD1 and USDC, with a liquidation threshold corresponding to a roughly 75% drop in WLFI price.

Currently, USD1 utilization rate is 83.4%, USDC is at 90.19%, and lending interest rates are about 5%. Taking into account WLFI rewards gained through Merkl, the supply rate is 10.64% (this campaign will end within 3 days). Meanwhile, WLFI collateral exceeds the tradable volume on a certain exchange by 4 times, and only 20% of the tokens are unlocked, with the rest expected to have their release schedule decided in mid-April. Following the incident, the team has repaid roughly 10 million USD1 and indicated they can provide additional collateral. At present, the team accounts for 82.7% of Dolomite's TVL and 85.3% of lending, with on-chain funds highly concentrated and purposes of the structure remaining unclear.