Imagine an extreme scenario: a large holder maliciously shorts the market, causing lisUSD to face selling pressure on DEX, and the price drops below $0.9. Panic spreads, and a surge of withdrawals ensues—everyone wants to redeem. Worse still, as the market crashes, the value of collateral BNB plummets, and the system faces bad debt risk. lisUSD falls into a death spiral, with the price plunging straight down to $0.1.

At this point, things become bizarre. Although the money you lent has depreciated (seemingly earning you profit on the surface), the protocol has urgently frozen global functions. You want to use cheap lisUSD to repay debt and exchange for expensive BNB, but the system simply won't let you move. Your collateral is locked inside this sinking ship.

Does this sound like a nightmare replay of the UST collapse? Indeed it does. But what needs to be clarified here is that lisUSD and pure algorithmic stablecoins are fundamentally different—they are over-collateralized.

Even so, to handle severe de-pegging in extreme situations, Lista has designed a Recovery Mode. When the total collateral ratio (TCR) drops below 150%, the protocol activates aggressive measures: the liquidation threshold becomes absurdly high—even if your LTV is below the safety line, you could still be liquidated due to dragging down the overall TCR. The new minting demand is frozen.

In plain terms, this is the protocol’s self-defense mechanism in extreme scenarios. Although it’s not friendly to borrowers, this defensive system is what sets Lisa apart from fragile pure stablecoins.