VIDA guru @Vida_BWE raised a great question about USD1. If we check the official website, we can see that USD1 currently has a fixed index price of 1 on BN, with no components involved. This means there’s no need to worry about de-pegging issues caused by liquidation in leveraged lending: 1. The liquidation price for USD1/USDT leveraged lending is fixed at 1, rather than the spot trading price of USD1/USDT being constantly 1. These are two different things. 2. This approach avoids endogenous de-pegging risks caused by large-scale forced liquidations from individual whales. 3. If de-pegging issues arise externally rather than from internal forced liquidation volumes, that’s a different story. For example, if on-chain de-pegging causes USD1’s price to drop to 0.5, but BN still fixes the index at 1, users across the market would buy on-chain and transfer to BN for “redemption” (using it as 1 in leveraged lending). BN would unconditionally become the counterparty for arbitrage. If WLFI doesn’t promptly redeem USDT for BN, BN might face losses. This fixed redemption method reflects goodwill from custodians (BN and any exchange willing to fix the index at 1). It also helps stabilize collateral value and avoid cascading liquidations. However, whether de-pegging can ultimately be avoided depends on the issuer (WLFI)’s redemption speed and ensuring no external de-pegging occurs. Overall, this collaboration model is more reliable than the ENA model. Typically, the issuer WLFI and the custodian BN promise timely 1:1 USDT redemption, similar to traditional bank market redemption practices.