In the previous article, we gave you a general introduction to the bad debt processing token COT of our platform, but due to space limitations, we did not give you a detailed introduction on how our platform ensures the liquidity of COT and how to deal with the possible occurrence of COT. Risk prevention and COT's future planning.

First of all, regarding the liquidity of COT, the key to the liquidity of an asset securitization product depends on the liquidity of the underlying assets of the product. At present, there are five main products that we consider to be put into the COT fund pool, namely BTC, ETH, SOL, USDC, and USDT. These assets not only have a large market value, but also have a high trading volume on major centralized exchanges and decentralized exchanges, thus ensuring that the liquidity of the entire COT fund pool is very good.

Secondly, the risks of the COT fund pool mainly include two aspects: the acquisition of bad debts, the risk of COT redemption, and the risk of changes in underlying assets. Specifically, first, the platform does not have enough stable currency as a reserve to purchase and meet the redemption needs of users when the "black swan event" occurs. In response to this problem, our consideration is to conduct a stress test related to TVL on the reserves before the platform goes online, and use the results of the stress test as the initial reserve of our platform. The current results of our stress test reserve The value range of is about 1% of TVL. At the same time, we have also taken into account the situation of users running out. First, we will give users a 1-day COT lock-up period. Secondly, our platform will have a dedicated market research team to dynamically adjust our bad debt positions based on market asset price correlation indicators to minimize the assets in the COT fund pool. unsystematic risk. Finally, if the asset fluctuates greatly, a large number of users want to sell COT at the same time, but the overall order depth in the market cannot meet our requirements for asset sale (it is difficult to happen in the early stage of the platform when the scale is small). We will first use our reserve fund to pay the user's redemption request. After the reserve fund is exhausted, if the user still has a redemption demand, we will give the user an immediate redemption option, but the redeemed assets are Assets in the pool of COT funds of equal value, not stable coins. The second is how COT, as an asset securitization product with a strong relationship with the underlying assets, will resist this part of the risk when large-scale fluctuations in assets occur. COT is a fund pool composed of multiple assets. According to the classic Mark maintenance portfolio theory in traditional finance, we can know that the unsystematic risk of a portfolio will be significantly reduced compared with a single asset. Therefore, when A certain asset fluctuates on a large scale. If two users hold the same position of COT and this asset, the loss of the user holding COT will be significantly smaller than that of the user holding this asset.

Finally, regarding the future planning of the COT fund pool, our team's idea is to stratify the COT fund pool after the COT operation matures, and introduce more assets to form different levels of asset securitization fund pools, so that Support more assets as our platform collateral to attract more users. The second is that the bad debt asset securitization business will be derived externally, helping lending platforms on different chains to deal with their bad debts, and becoming the leading agreement for bad debt handling in the DeFi ecosystem.