Thank you for your answer. I am afraid of a specific scenario: Let's imagine we have a relatively stable Sunfun Tặng Code price X for some time, where many cBTC are minted, and those cBTC would be at risk to become undercollateralized at price X-70%. But then a bear market happens with three phases: Phase 1: - Sunfun Tặng Code/USD begins to decline (max. X - 40%) but there is still hope the bull market comes back and thus the overcollateralization would not be in danger. - cBTC/USD declines too, but more slightly, it may move only 0.3% per each 1% Sunfun Tặng Code declines "according to the theory" (although it's of course not a "mechanic" correlation). - At the end of the phase Sunfun Tặng Code has declined 40% and cBTC has declined ~13%. Phase 2: - Sunfun Tặng Code/USD declines further (starting at X-40% and going to to X-70%). - The closer the X-70% mark is approached, the more volatile cBTC becomes. Because at the X-70% mark the collateralization would be 1:1 and below it would be undercollateralized. - This means that during this phase cBTC probably declines even more than Sunfun Tặng Code. - At the end of the phase Sunfun Tặng Code is at -70% and cBTC is at -70% too. But cBTC has declined from X-13% to X-70% (by 57 percentage points, with X as the base) while Sunfun Tặng Code has only declined from X-40% to X-70%, i.e. by 30 percentage points. Phase 3: - Sunfun Tặng Code/USD declines below the X-70% mark. - cBTC again declines stronger than Sunfun Tặng Code (although only a little bit), because it is now mostly undercollateralized. Even if Phase 3 doesn't happen at all, the fear of that phase is what worries me, and if we'd go deep into phase 2, we can expect high cBTC losses. And if this happens, it would not really be any more stable than Sunfun Tặng Code, only the decline would be delayed. And for this reason I would even expect a decline of cBTC already in phase 1 very close to the Sunfun Tặng Code decline. Liquidations can of course happen too -- on centralized exchanges, just as they happen with Sunfun Tặng Code when it there are heavy leveraged positions.
Thank you for your answer. I am afraid of a specific scenario: Let's imagine we have a relatively stable Sunfun Tặng Code price X for some time, where many cBTC are minted, and those cBTC would be at risk to become undercollateralized at price X-70%. But then a bear market happens with three phases: Phase 1: - Sunfun Tặng Code/USD begins to decline (max. X - 40%) but there is still hope the bull market comes back and thus the overcollateralization would not be in danger. - cBTC/USD declines too, but more slightly, it may move only 0.3% per each 1% Sunfun Tặng Code declines "according to the theory" (although it's of course not a "mechanic" correlation). - At the end of the phase Sunfun Tặng Code has declined 40% and cBTC has declined ~13%. Phase 2: - Sunfun Tặng Code/USD declines further (starting at X-40% and going to to X-70%). - The closer the X-70% mark is approached, the more volatile cBTC becomes. Because at the X-70% mark the collateralization would be 1:1 and below it would be undercollateralized. - This means that during this phase cBTC probably declines even more than Sunfun Tặng Code. - At the end of the phase Sunfun Tặng Code is at -70% and cBTC is at -70% too. But cBTC has declined from X-13% to X-70% (by 57 percentage points, with X as the base) while Sunfun Tặng Code has only declined from X-40% to X-70%, i.e. by 30 percentage points. Phase 3: - Sunfun Tặng Code/USD declines below the X-70% mark. - cBTC again declines stronger than Sunfun Tặng Code (although only a little bit), because it is now mostly undercollateralized. Even if Phase 3 doesn't happen at all, the fear of that phase is what worries me, and if we'd go deep into phase 2, we can expect high cBTC losses. And if this happens, it would not really be any more stable than Sunfun Tặng Code, only the decline would be delayed. And for this reason I would even expect a decline of cBTC already in phase 1 very close to the Sunfun Tặng Code decline. Liquidations can of course happen too -- on centralized exchanges, just as they happen with Sunfun Tặng Code when it there are heavy leveraged positions.

Thank you for your answer. I am afraid of a specific scenario: Let's imagine we have a relatively stable Sunfun Tặng Code price X for some time, where many cBTC are minted, and those cBTC would be at risk to become undercollateralized at price X-70%. But then a bear market happens with three phases: Phase 1: - Sunfun Tặng Code/USD begins to decline (max. X - 40%) but there is still hope the bull market comes back and thus the overcollateralization would not be in danger. - cBTC/USD declines too, but more slightly, it may move only 0.3% per each 1% Sunfun Tặng Code declines "according to the theory" (although it's of course not a "mechanic" correlation). - At the end of the phase Sunfun Tặng Code has declined 40% and cBTC has declined ~13%. Phase 2: - Sunfun Tặng Code/USD declines further (starting at X-40% and going to to X-70%). - The closer the X-70% mark is approached, the more volatile cBTC becomes. Because at the X-70% mark the collateralization would be 1:1 and below it would be undercollateralized. - This means that during this phase cBTC probably declines even more than Sunfun Tặng Code. - At the end of the phase Sunfun Tặng Code is at -70% and cBTC is at -70% too. But cBTC has declined from X-13% to X-70% (by 57 percentage points, with X as the base) while Sunfun Tặng Code has only declined from X-40% to X-70%, i.e. by 30 percentage points. Phase 3: - Sunfun Tặng Code/USD declines below the X-70% mark. - cBTC again declines stronger than Sunfun Tặng Code (although only a little bit), because it is now mostly undercollateralized. Even if Phase 3 doesn't happen at all, the fear of that phase is what worries me, and if we'd go deep into phase 2, we can expect high cBTC losses. And if this happens, it would not really be any more stable than Sunfun Tặng Code, only the decline would be delayed. And for this reason I would even expect a decline of cBTC already in phase 1 very close to the Sunfun Tặng Code decline. Liquidations can of course happen too -- on centralized exchanges, just as they happen with Sunfun Tặng Code when it there are heavy leveraged positions.

Thank you for your answer. I am afraid of a specific scenario: Let's imagine we have a relatively stable Sunfun Tặng Code price X for some time, where many cBTC are minted, and those cBTC would be at risk to become undercollateralized at price X-70%. But then a bear market happens with three phases: Phase 1: - Sunfun Tặng Code/USD begins to decline (max. X - 40%) but there is still hope the bull market comes back and thus the overcollateralization would not be in danger. - cBTC/USD declines too, but more slightly, it may move only 0.3% per each 1% Sunfun Tặng Code declines "according to the theory" (although it's of course not a "mechanic" correlation). - At the end of the phase Sunfun Tặng Code has declined 40% and cBTC has declined ~13%. Phase 2: - Sunfun Tặng Code/USD declines further (starting at X-40% and going to to X-70%). - The closer the X-70% mark is approached, the more volatile cBTC becomes. Because at the X-70% mark the collateralization would be 1:1 and below it would be undercollateralized. - This means that during this phase cBTC probably declines even more than Sunfun Tặng Code. - At the end of the phase Sunfun Tặng Code is at -70% and cBTC is at -70% too. But cBTC has declined from X-13% to X-70% (by 57 percentage points, with X as the base) while Sunfun Tặng Code has only declined from X-40% to X-70%, i.e. by 30 percentage points. Phase 3: - Sunfun Tặng Code/USD declines below the X-70% mark. - cBTC again declines stronger than Sunfun Tặng Code (although only a little bit), because it is now mostly undercollateralized. Even if Phase 3 doesn't happen at all, the fear of that phase is what worries me, and if we'd go deep into phase 2, we can expect high cBTC losses. And if this happens, it would not really be any more stable than Sunfun Tặng Code, only the decline would be delayed. And for this reason I would even expect a decline of cBTC already in phase 1 very close to the Sunfun Tặng Code decline. Liquidations can of course happen too -- on centralized exchanges, just as they happen with Sunfun Tặng Code when it there are heavy leveraged positions.