Stable blue chip model

The Stable Blue Chip kink model is a specific variation of the kink model that is used in decentralized finance (DeFi) lending protocols. It is designed to work with assets that are considered to be "blue chip" or highly stable, such as USDT and USDC.

The model sets an optimum collateralization ratio of 90% for these types of assets. This means that, in order to borrow assets, borrowers must provide at least 90% of the value of the loan in collateral. The idea behind this is that such assets are considered to be less volatile, and therefore, it is safer for lenders to lend them out with a lower collateralization ratio.

Below this point, the liquidation ratio is relatively low, meaning that a relatively small amount of value in collateral is required to secure a loan. This is intended to encourage liquidity providers to supply assets to the platform, since they can do so with a relatively small amount of collateral.

As the collateralization level goes above this 90% point, the liquidation ratio increases rapidly. This is intended to protect the lender from too much risk in case the value of the collateral drops rapidly.