World Liberty Calls Liquidation Risk FUD

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Good Morning

When you borrow $75M against a token you control, through a protocol your own advisor co-founded, and then move $40M to Coinbase hours before a Trump policy announcement, "trust us, we're fine" isn't a great look.

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In Today's Email:

• What Matters: World Liberty Calls Liquidation Risk FUD 👀 

• Founders Highlight: Dingaling of Predict.fun 👨 

• Deal Flows: Pharos Raises $44M to Bridge TradFi and DeFi 💰️ 

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WHAT MATTERS

World Liberty Calls Liquidation Risk FUD

State of play: World Liberty Financial is pushing back on liquidation fears after data revealed a $75M stablecoin borrow against 5B $WLFI on Dolomite, a lending protocol co-founded by a WLFI advisor, calling the concerns FUD.

• WLFI deposited ~5B WLFI on Dolomite as collateral to borrow $75M in stablecoins, transferring $40M+ to Coinbase Prime hours before Trump's US-Iran ceasefire announcement.

• WLFI now makes up over half of Dolomite's $825.4M in supplied assets, a concentration analysts warn creates unliquidatable bad debt risk for other lenders.

• WLFI dismissed concerns as FUD, saying it would simply supply more collateral if markets moved against them.

Why it matters: A single borrower controlling over half of a lending protocol's collateral is systemic risk. If WLFI breaks down, Dolomite's lenders eat the loss with no viable liquidation path given WLFI's thin liquidity.

Our take: Calling it FUD doesn't make the math wrong. World Liberty is borrowing real dollars against an illiquid token it controls, through a protocol co-founded by its own advisor. "We'll add more collateral" is a confidence game, not a risk strategy.

For builders and investors: If you're lending stablecoins in WLFI-exposed pools on Dolomite, exit. More broadly, DeFi protocols need on-chain concentration limits before the next insider pulls the same move.

BUILDER-INVESTOR HIGHLIGHT

Dingaling of Predict.fun

Intro: Dingaling is the Founder of Predict.fun, a decentralized prediction market protocol on BNB Chain gaining rapid traction.

Previous background: Dingaling made his name as a prominent anonymous NFT whale and serial crypto entrepreneur before stepping into public-facing leadership.

• Early contributor to LooksRare and boop.fun, cementing his standing in NFT culture and onchain communities.

The big idea: Dingaling frames prediction markets as information trading and risk hedging over gambling, building a skill-first platform where NFTs generate yield and users bet on outcomes, not chance.

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INSIGHTS

Covenant AI Blasts Bittensor, TAO Drops 15%

Covenant AI is walking away from Bittensor after founder Sam Dare accused co-founder Jacob Steeves of maintaining unchecked control over a network marketed as decentralized, calling it "decentralization theatre" as TAO dropped 15% on the news.

• Dare alleged Steeves suspended emissions to Covenant's subnets, removed its moderation capabilities, and deprecated its infrastructure as punitive moves after Covenant grew too large to manage.

• Bittensor's "triumvirate" governance structure, presented as distributed control, was called out as a facade with Steeves making unilateral upgrades without process or consensus.

• Covenant had built the largest decentralized LLM pre-training run in history on Bittensor before the fallout.

• Covenant will announce new projects outside the network soon.

• TAO fell from $338 to $285 within two hours of the announcement before partially recovering to $294, while Steeves responded indirectly by teasing lock-based subnet ownership as a governance fix.

DEAL FLOWS

Pharos Raises $44M to Bridge TradFi and DeFi

Deal flows slowed down this week - we saw $60M+ in deals 💼 

Pharos, a financial-grade Layer 1 blockchain targeting the $50T RWA and TradFi market, has closed a $44M Series A backed by Sumitomo's CVC arm, Chainlink, Flow Traders, and undisclosed institutional investors.

• Pharos is built with deep-parallel execution architecture and native compliance for real-time institutional applications at scale.

• The network's AtlanticOcean Testnet has onboarded millions of users and unique addresses, with a strategic RWA partnership with energy giant GCL for solar-backed assets.

• Backers include Sumitomo Corporation's CVC, SNZ Holding, Chainlink, and Flow Traders, alongside undisclosed global finance players.

Deal flows in the past week:

• Giggles, $1.2M Pre-Seed Round

• GoSats, $5M Series A Round

• Oh, $7.5M Series A Round

• Pharos, $44M Series A Round

• Libeara, Undisclosed $ Series A Round

• NanoVita, Undisclosed $ Series A Round

• Diamante, $1.5M Strategic Round

• Transak, Undisclosed $ Strategic Round

• Splyce Finance, Undisclosed $ Strategic Round

• INXY Payments, $4M Unknown Round

• AlphaTON, $43M Unknown Round

QUICK BITES

• Covenant AI exits Bittensor, TAO drops 15%.

• Spot bitcoin ETFs post net outflows despite $31M inflows.

• CZ claims US crypto rivals 'paid millions' to block his pardon.

• Bitget debuts IPO Prime market with SpaceX pre-IPO exposure token.

• HSBC & Anchorpoint Financial gain first HK stablecoin issuer licenses.

• Japan's cabinet approves bill to classify crypto assets as financial products.

• Galaxy stock rallies 11% after annual report shows core business profitable.

• WLFI defends borrowing position on Dolomite, dismisses liquidation concerns.

NOTEWORTHY READS & MEME

• Jay’s read on How Perps Are Rewriting Global Trading.

• Pei’s read on Asset Management's New Role in a Generation.

• DeFi Cheetah’s read on Lower APYs are a Feature of Market Democratization.

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.