Stress Testing and Scenario Analysis

Paydax regularly conducts comprehensive stress tests using advanced simulation models. These tests subject the platform to a range of hypothetical adverse scenarios—such as sharp declines in collateral asset prices, sudden spikes in market volatility, or liquidity crunches—to evaluate how the protocol would respond. Stress testing allows us to:

• Analyze the impact of extreme market events on the platform's balance sheet and collateralization ratios

• Identify potential vulnerabilities in the liquidation and stability mechanisms

• Ensure that the system maintains solvency and can fulfill user obligations even during periods of significant market stress

The results of these stress tests are systematically documented and reviewed, enabling proactive adjustments to risk parameters and collateral requirements as needed.