Last week's sharp decline fully revealed a reality: when Bitcoin rapidly dropped from $92,000 to $84,600, the liquidation mechanisms across major exchanges instantly kicked in, causing mass liquidations of long positions. But amidst this bloodbath, one asset remained unmoved—stablecoins based on over-collateralization, with collateral ratios stable above 130%, completely unaffected.

The logic behind this is actually simple. Truly over-collateralized stablecoins are backed by more than $1.3 worth of hard assets like BTC, TRX, etc., per coin. Extreme market conditions are precisely when these assets demonstrate their resilience. When your altcoins are halved and leveraged positions evaporate, these stablecoins continue to generate stable yields—staking pool APYs still hover around 4.7%.

Let's also look at the disaster last night: how many people went to zero overnight because they were fully leveraged with high multiples? If they had maintained a 30% stablecoin allocation, the outcome would have been completely different. During a crash, stablecoins can be used as collateral to avoid liquidation risks, and after the drop, they can be immediately converted into cheap buying opportunities. When idle, they also continuously generate interest.

This is the true risk management approach: don't go naked in extreme market conditions. It is recommended to allocate 20% of your total position into stablecoins, which neither limits your profit potential nor reduces your room for maneuver when the market loses control. After multiple cycles, these over-collateralized stablecoins have been reaffirmed by the market each time there is a waterfall decline—because they address real needs.