Bank run

All assets sharing liquidity in the pool are carefully selected, with comprehensive risk assessments conducted. However, we cannot guarantee that a bank run will not occur, especially in the event of a sudden price drop due to a black swan event.

During a bank run, suppliers may be unable to withdraw their funds until liquidity is restored. To attract deposits back into the protocol, interest rates for suppliers will rise significantly—potentially reaching 100% APY—to attract more supplies the protocol if lenders are confident that the price will be back after panic.

And for any asset, we have the debt ceiling to control the risk of single asset.

If prices do not rebound and liquidations remain incomplete, Bitty will use its treasury to join the auction to stop the bad debt. The treasury is expected to grow over time through revenue generated from the protocol. Our peer-to-pool lending model aims to provide an optimal lending experience while minimizing aggressive strategies that could lead to bad debts impacting the treasury.