I modeled one Babylon TBV position at a Health Factor of 1.0400 with only $1,500 available for an emergency rescue.
The question was not whether extra capital would help.
It was which action would buy more safety per dollar.
Starting position:
Native collateral: 0.3500 BTC
BTC reference price: $66,240
Collateral value: $23,184
Risk-adjusted value at 78%: $18,083.52
Debt: $17,388
Starting HF: 1.0400
Option A used the full $1,500 to repay debt.
New debt: $15,888
New HF: 1.1382
Option B used the same $1,500 to add approximately 0.0226 BTC as collateral.
Total collateral: about 0.3726 BTC
Additional risk-adjusted value: $1,170
New HF: 1.1073
Both actions made the position safer, but they did not buy the same safety.
A dollar of repayment removed one full dollar of debt. A dollar of new collateral contributed only $0.78 of risk-adjusted value under the current collateral factor.
I then calculated the capital required to restore HF 1.24:
Repay required: about $2,804.52
Additional collateral required: about $4,458.46
That is Rescue Capital Efficiency.
Repayment restored more HF per dollar. Adding collateral preserved more of the liquidity already borrowed.
The better action therefore depends on what the borrower wants to protect: the safety margin or the borrowed capital.
My Public Testnet feedback is to add a rescue calculator showing:
Repay $X → projected HF
Add collateral worth $X → projected HF
Capital needed for HF 1.10 and 1.24
Borrowed liquidity retained under each option
When a position is under pressure, users should not have to calculate the cheapest path back to safety manually.
With the same $1,500 available, would you reduce the liability or increase the collateral?
@BabylonLabs_io $BABY #baby
The question was not whether extra capital would help.
It was which action would buy more safety per dollar.
Starting position:
Native collateral: 0.3500 BTC
BTC reference price: $66,240
Collateral value: $23,184
Risk-adjusted value at 78%: $18,083.52
Debt: $17,388
Starting HF: 1.0400
Option A used the full $1,500 to repay debt.
New debt: $15,888
New HF: 1.1382
Option B used the same $1,500 to add approximately 0.0226 BTC as collateral.
Total collateral: about 0.3726 BTC
Additional risk-adjusted value: $1,170
New HF: 1.1073
Both actions made the position safer, but they did not buy the same safety.
A dollar of repayment removed one full dollar of debt. A dollar of new collateral contributed only $0.78 of risk-adjusted value under the current collateral factor.
I then calculated the capital required to restore HF 1.24:
Repay required: about $2,804.52
Additional collateral required: about $4,458.46
That is Rescue Capital Efficiency.
Repayment restored more HF per dollar. Adding collateral preserved more of the liquidity already borrowed.
The better action therefore depends on what the borrower wants to protect: the safety margin or the borrowed capital.
My Public Testnet feedback is to add a rescue calculator showing:
Repay $X → projected HF
Add collateral worth $X → projected HF
Capital needed for HF 1.10 and 1.24
Borrowed liquidity retained under each option
When a position is under pressure, users should not have to calculate the cheapest path back to safety manually.
With the same $1,500 available, would you reduce the liability or increase the collateral?
@BabylonLabs_io $BABY #baby