A -5.63% hour and a -7.57% day put a liquidation trigger to the test
Should a lender raise the collateral margin it requires on ETH-backed loans after a 30.81% weekly range, or keep its terms and rely on liquidation at the existing trigger?
The market facts are real; the decision maker is illustrative.
The week and the position
In the week of 8 April 2024, ETH fell 8.66% from 3,454.20 to 3,155.11, with a 30.81% range between a high of 3,730.71 on Monday and a low of 2,852.00 on Saturday, and 96.0% annualised realised volatility. The largest hourly move was -5.63%, coinciding with the low at 20:00 UTC Saturday, and the worst day was -7.57% on Friday. Dollar volume was 1.35 times the prior 12-week average. An illustrative lender accepts ETH as collateral and sells it when coverage drops below a fixed trigger.
Judgment
A trigger protects the lender only if collateral sells near the trigger price, and a -5.63% hour plus a -7.57% day can carry it through. Raise the required margin for ETH, sized from the worst hour and worst day rather than the 8.66% weekly move or the 0.0131% average eight-hour funding. Existing loans keep their terms; only new loans use the higher margin, and the 34.5% close location suggests the week ended well off its low.
What would change it
If the lender's records show this week's liquidations filled within a narrow band of the trigger price, the case for a higher margin weakens. If hourly and daily moves shrink back for several consecutive weeks, the margin can be reviewed downward.
What sets this case apart
The decision rests on how far ETH travels within a single hour at a weekend low, not on the week's headline loss.