A -4.87% hour after a -41.47% week sets the margin for ETH collateral
Should the lender raise the collateral margin it requires on ETH-backed loans now, or keep its terms and rely on automatic liquidation at the existing trigger?
The market facts are real; the decision maker is illustrative.
The week and the position
In the week of 7 June 2021, ETH fell 7.47%, from 2,711.92 to 2,509.33, inside a 26.21% range from 2,847.55 (Monday) to 2,256.22 (Saturday). It lost 5.33% on 10 June and 4.87% in one hour early on 8 June, then gained 5.85% on 13 June. The prior four weeks included a -41.47% week. ETH fell 15.12% against BTC during the week, the larger weekly move being BTC's. An illustrative lender accepts ETH as collateral and liquidates below a fixed trigger, and 8-hour funding averaged only 0.0099%.
Judgment
A trigger only protects the lender if the collateral can be sold near it. ETH moved 4.87% in a single hour early on 8 June and 26.21% across the week, with realised annualised volatility at 110.5%, so a 4.87% hour can carry collateral through the trigger before a liquidation fills, and the week's 15.12% loss against BTC shows the collateral weakening beyond the headline move. Raise the required margin for ETH now, set from the worst hourly and daily moves of this and the prior -41.47% week rather than the weekly average. Keep existing loans on their terms; new loans use the higher margin.
What would change it
If the lender's own liquidation records show fills this week close to the trigger price, the case for a higher margin weakens. If ETH's hourly moves shrink for several weeks and its BTC-relative losses stop widening, the margin can be reviewed.
What sets this case apart
The decision turns on how far collateral can overshoot a liquidation trigger inside one hour, and on ETH's underperformance against BTC, not on the week's headline loss.