Volatile blue chip

The volatile blue chip model is designed to work with assets that are considered to be "blue chip" or major coins, but are also highly volatile in terms of their value, such as wBTC, ETH, AVAX, and other major cryptocurrencies. These assets, despite being considered "blue chip," can experience significant fluctuations in price, and as such, require a higher level of collateralization to protect lenders from potential losses.

Our model sets an optimum collateralization ratio of 55% for these types of assets. This means that, in order to borrow assets, borrowers must provide at least 55% of the value of the loan in collateral. The idea behind this is that, despite these assets being considered "blue chip," their high volatility requires lenders to secure a greater amount of collateral to mitigate the risk of potential losses.

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 55% 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.

The key difference of this model with Stable Blue Chip kink model is the lower collateralization ratio due to the relatively higher volatility of this class of assets. The kink point or inflection point where the liquidation ratio "kinks" or changes from one slope to another is set at 55%.

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