BlockBeats news, on June 6, Sonic co-founder Andre Cronje stated that during the first major market drawdown on the derivatives platform FT (FlyingTulip), the equity-based lending model resulted in only approximately $50,000 in liquidations. Due to the use of net risk calculation instead of a discounted collateral model, combined with the soft liquidation mechanism, the average liquidation amount per position was only between $200 and $2,000.
Andre Cronje noted that, if a traditional loan-to-value (LTV)-based lending system were used, the scale of liquidations during this market volatility could increase by a factor of 10 to 20.
He stated that the equity account model enables net risk management and reduces market impact through a soft liquidation mechanism, resulting in a safer, less volatile, and lower-discount lending experience.