#baby $BABY When I saw @BabylonLabs_io ’s current public testnet setting the 78% parameter for BTC, I almost mistook it for “you can safely borrow up to this portion.” Later, after plugging it into the Health Factor, I realized that the 78% describes the boundary the protocol allows to be touched—not a safe position suitable for long-term holding. The maximum borrow limit and the safe borrow limit may look like they differ by just a few words, but behind them are completely different liquidation probabilities.

Assume 0.1 BTC is worth 10,000 USDT. After a 78% risk adjustment, the collateral value that can be counted is 7,800 USDT. If you borrow 7,000 USDT, the initial Health Factor is about 1.11. BTC only needs to drop 10% for the adjusted collateral value to fall to 7,020 USDT, and the Health Factor becomes about 1.003. At that point, combined with interest accrual, the position can easily enter the liquidatable zone. If you borrow the full 7,800 USDT directly, there’s almost no room for price fluctuation.$BTC

If instead you borrow only 5,500 USDT, the initial Health Factor is about 1.42. Even if BTC pulls back 20%, and ignoring interest for the moment, it’s still around 1.13. With the same protocol parameters, the outcome depends on whether the user proactively keeps a buffer. TBV can keep native BTC on Bitcoin, but it won’t manage leverage on behalf of anyone. The protocol tells you how far you can go—but where you truly should stop is still up to you.#baby $BABY