WLFI tokens nosedived after reports emerged that the project backed by the former president's team had pledged enormous amounts of its native cryptocurrency to borrow stablecoins. This unconventional lending approach has sparked concerns among investors about the project's financial health and tokenomics. The revelation comes at a particularly sensitive time for crypto markets, which have faced increasing scrutiny over lending practices following last year's high-profile collapses. Critics argue that using a project's own token as collateral creates dangerous circular dependencies that can trigger catastrophic cascades if the token's value declines significantly, as appears to be happening now with WLFI.