World Liberty Financial launches USD1 stablecoin! $3.4 billion to target on-chain lending

World Liberty Financial launches the World Liberty Markets lending platform, with a core stablecoin USD1 circulating at $3.4 billion. Smart contracts manage loans, allowing users to collateralize ETH, BTC to borrow USD1. The platform supports cryptocurrencies and stablecoins, plans to incorporate RWA, and has applied for OCC licensing.

USD1 Stablecoin: From Payment Tool to Lending Core

World Liberty Financial is a new player in the decentralized finance (DeFi) space. The project is associated with the Trump family in the United States and entered the crypto lending market through the launch of World Liberty Markets. World Liberty Markets is an on-chain lending platform centered around the project’s USD1 stablecoin backed by the US dollar. Currently, USD1 has a circulating supply of about $3.4 billion. The project positions the stablecoin as a payment tool while also making it a key component of a blockchain-based credit market.

Before launching the lending program, USD1 was already used for cross-border transfers, focusing on the financial operations of crypto companies, and liquidity pools on decentralized exchanges. The rapid growth of USD1 supply indicates it is not only used as a trading pair but also as a settlement asset for broader financial activities. This liquidity is now expanding into on-chain credit markets via World Liberty Markets. The growth from 0 to $3.4 billion is astonishing, showing strong market demand for the stablecoin endorsed by the Trump family.

USD1 plays a central role in the World Liberty ecosystem. Users can provide volatile assets such as Ethereum (ETH) or tokenized Bitcoin (BTC) and borrow USD1, gaining liquidity without selling these assets. This model is similar to traditional secured loans, where borrowers collateralize assets for cash, but it operates entirely on blockchain systems. Stablecoin-based lending also supports advanced financial activities, including leverage trading, hedging strategies, and funding for crypto-focused enterprises.

Three Main Functions of USD1 in the World Liberty Ecosystem

Payment Tool: Settlement currency for cross-border transfers and daily transactions

Lending Core: Main lending currency and valuation unit for the platform

Liquidity Asset: Underlying asset for DEX trading pairs and DeFi protocols

Stablecoins play a crucial role in crypto lending markets because they provide a stable accounting unit, are less volatile compared to crypto collateral, and facilitate easier integration of payments and off-chain finance. World Liberty’s choice to build its own stablecoin instead of using USDT or USDC may be to maintain ecosystem control and earn issuance revenue from stablecoin issuance (by investing reserves in government bonds and earning interest).

Smart Contract Lending Replaces Centralized Intermediaries

The core of World Liberty Markets is a collateralized loan marketplace. Users deposit assets into asset pools, which are available for borrowers. The value of collateral must exceed the loan amount to protect lenders from default risk. The platform uses smart contracts to manage loan terms, replacing centralized intermediaries with transparent, automated risk control visible on the blockchain.

The platform supports a decentralized system for the supply and demand of credit. Its structure is similar to existing DeFi lending protocols like Aave and Compound, with USD1 as the central liquidity asset. Loan terms, collateral ratios, and liquidation thresholds are enforced by automated smart contracts, not relying on off-chain balance sheets or manual approval. Risk parameters are directly visible on the blockchain, accessible and verifiable by anyone.

Supported collateral includes Ethereum (ETH), tokenized Bitcoin (BTC), and stablecoins such as USDC and USD1. Interest rates fluctuate based on supply and demand within each asset pool. When collateral value falls below a set threshold, automatic liquidation may occur to maintain solvency. In DeFi, interest rates change block-by-block, meaning borrowing costs can update every few seconds on faster blockchains. This differs from traditional loans, where interest rates are often fixed for months or years.

World Liberty has also announced plans to support tokenized real-world assets (RWA), allowing tokens linked to real estate or treasury bonds to be used as collateral. If implemented, this would expand on-chain credit beyond purely crypto-native markets. RWA integration is part of World Liberty’s long-term vision but presents challenges related to asset verification, legal enforceability, and cross-border regulation.

OCC License Application and Regulatory Compliance Strategy

Before launching its lending operations, World Liberty applied for a national trust bank license from the U.S. Office of the Comptroller of the Currency (OCC). While approval is not guaranteed, this application demonstrates a long-term strategy focused on regulatory compliance. If approved, such a license could enable World Liberty Financial to offer custodial services, combine stablecoin issuance with regulated financial activities, and facilitate partnerships with traditional payment systems.

This approach reflects a broader shift in the crypto industry toward seeking regulated structures rather than operating entirely outside traditional finance. Regulatory clarity around stablecoins and digital asset custody in the U.S. and elsewhere reduces uncertainty for institutions and rekindles interest in blockchain-based credit systems.

The previous failures of crypto lending markets, such as BlockFi and Celsius, were mainly due to excessive leverage by centralized entities, unclear risk controls, and rehypothecation of customer assets. These cases highlight risks inherent in centralized lending models, not flaws in blockchain technology itself. In contrast, DeFi protocols operate with clear collateral ratios, transparent liquidation procedures, and real-time solvency checks. World Liberty Markets adopts this transparent DeFi model.

Despite growing interest in on-chain lending, risks remain, including smart contract vulnerabilities, market shocks triggering rapid liquidations, regulatory uncertainties around stablecoin reserves, and liquidity concentration in a few assets. Some DeFi lending protocols can execute liquidations within seconds—faster than many traditional exchanges pause trading. During volatile crypto markets, automated bots often perform these liquidations swiftly.

While over-collateralization reduces default risk, it also limits access to loans for users with smaller crypto holdings. Currently, on-chain credit mainly serves existing asset holders seeking to improve capital efficiency rather than promoting financial inclusion. Supporting tokenized RWAs could broaden on-chain credit scope but also introduces challenges related to asset verification, legal enforceability, and cross-border regulation.