Wen Lambo Financial (WLFI)

I just saw someone saying USD1 plunged, fearing a repeat of the CRV incident, so I checked what it was about.

The cause seems to be that the project opened a pool; depositing USD1 on Dolomite earns WLFI official rewards (about 10% from WLFI tokens) + basic lending interest + oDOLO rewards. The total APR now reaches 35%, but it's not fixed—it’s floating.

Then someone speculated that this APR is abnormal in a bear market and worried about a CRV‑like event.

Now let’s explain what the CRV event was.

In 2023, Curve was exploited via a re‑entrancy bug, repeatedly calling the contract to withdraw unlimited funds, which caused CRV to crash. Many people were watching at the time.

If USD1 were to replicate the CRV event, what could happen?

1. USD1 deposited in the official pool could be drained and unrecoverable.
2. USD1 depegs: USD1 has BitGo custodial and audit backing; if it were stolen, a temporary depeg is possible.
3. APR drops: if stolen, WLFI would certainly fall, so the APR could not be maintained.
4. Cascading liquidations.

So, if we’re not worried about a USD1 CRV‑like repeat, what can we do?

Only hold Binance’s USD1. If something does happen—WLFI price falls, APR drops, USD1 temporarily depegs—there’s a chance of re‑pegging. All DeFi carries risk; if you’re concerned, monitor utilization, borrower concentration, and large official movements in real time, and act promptly when issues arise.

The stablecoin has been fully borrowed; this situation has occurred countless times, each time differently. This time, there are several points to watch regarding USD1.

First, most of this money was borrowed by reserve addresses—what they are doing with it matters. If it can be repaid at any time, there is little problem; however, if withdrawals later need to be converted to USD, there could be issues, which warrants ongoing observation.

Another concern is whether a targeted breakout could occur, liquidating the borrowing position—this happened with CRV.

Theoretically this is possible, but the collateral is WLFI, a token with relatively concentrated holdings. If the team does not encounter internal problems and does not borrow out too much capital to pull the health factor very low, external price manipulation is difficult, though the risk cannot be entirely ruled out.

However, this also depends on what the borrowed funds are used for; if they can be repaid promptly and the liquidation line is actively managed, the issue is not significant.

Finally, whether the stablecoin USD1 itself has any issues—its collateral has already been publicly disclosed and is the most easily tracked.

If the team's intention is good, such as incentivizing the use of the borrowing market, I recommend not being so aggressive with borrowing; at least, when withdrawals become difficult, repay promptly to give users sufficient liquidity for exit. This can be implemented with an automatic balancing program, while monitoring WLFI's price to preempt manipulation risk.

Reminder to everyone holding $WLFI: do you remember the $CRV by the Daming Lake back then?

It all turned into the project team's big HOUSE, and when trouble arises, everyone is expected to come to the rescue 😂 https://t.co/l72kReXULd