first,

Original compilation: TechFlow intern

first,If 3AC (Three Arrows Capital) collapsed, the impact would be huge because they took out loans from every well-known, well-funded lender.Think BlockFi, Genesis, Nexo, Celsius, every lender is expected to bear the brunt of the 3AC.

3AC's assets, the last public asset figure was marked as $18 billion, I strongly suspect their true net worth at the time was much lower, rumor has it that while they have disposed of assets, they still have collateral on Deribit.

But we still use 18 billion to calculate, assuming that 9 billion is the fair value of the VC portfolio, and 9 billion is the working capital.

Assuming all of these assets are the safest BTC (yes I know they have altcoins but they are dead)From November 21st to now, their liquidity will be reduced by almost 70%.

Their liquidity is only worth 2.7 billion at most, and if you add the risk of altcoins, their liquidity will be reduced to 1 billion or less in reality. This is in line with rumored reports that they were unable to meet their margin requirements.

Failure to meet margin calls is the death knell for any hedge fund. Whether it’s a cryptocurrency or a traditional fund, there are reports that they tried to use Starkware equity as collateral.

3AC is one of the largest customers of global lending, and their failure would transfer economic risk to their lenders. Lenders will cover the difference between what they owe and the liquidated collateral.

These lenders are ill-prepared, they operate balance sheets of $10bn-20bn with ~5% equity buffers (the margin by which assets exceed the value of liabilities), meaning a default would result in significant equity erosion.

Not all lenders are the same. Celsius is the worst, it's broken. Nexo I don't know, BlockFi sucks too, Genesis is probably the best performer of them all.

this means,Lenders will protect themselves by withdrawing credit from the system. All lenders probably have about 50 billion (estimated) in loans... I would expect 30-40 billion in credit destroyed, ie loans called in, credit curtailed.

When credit leaves the system, there is less money overall, and the same amount of assets, with less money, lowers the price of the asset.

Further, when credit is withdrawn, the overall balance sheet of each participant shrinks as risky assets are tokenized and market makers are less able to provide liquidity.

The difference between the bid and ask price widened,For funds - they need to deleverage as volatility increasestheir risky assets to maintain the same risk value.Essentially,

Essentially,The collapse of major funds and major lenders would shrink overall credit in the system and lead to continued deleveraging.We have had an orderly liquidation so far, but there are still more people to deleverage.

How much is reasonable for the price, to be honest, I don't know. We may need the casino owners to come forward, after all, if your customers are dead, you need to wait for more customers to come, and your business will be good.

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