Extreme Market Simulations

In addition to stress testing, we run regular simulations to model the protocol's behavior under various extreme market conditions. These simulations help us understand:

• How the platform's automated liquidation and stability mechanisms would perform during rapid market downturns

• The effectiveness of over-collateralization buffers in protecting both borrowers and lenders

• The interplay between user sentiment, collateral value, and liquidity during periods of heightened uncertainty

Such scenario analysis ensures that Paydax is prepared for multiple market environments, including those that may lead to self-fulfilling liquidity or price spirals.