Crypto loan stress test: run it through a crash

Try a scenario:

Your loan

Collateral

Collateral value at the start

Sets the dollar figures; the health factor does not depend on size.

Set the loan by

Starting loan-to-value

Debt ÷ collateral value when you open the loan.

Liquidation threshold

Set by the lending market for this collateral; check its current parameters.

Debt is a US-dollar stablecoin (untick for a CAD-denominated debt; CAD conversions use the Bank of Canada rate for each date)

The crash

Run it through

Reported: “more than half”, $4,360 on May 12 to $2,050 (−53% from those prices). Simplified path: a straight fall of 53.0% from May 12, 2021 to May 19, 2021, per Fortune (2021-05-20), then flat for two weeks. Not price data; real prices bounced and wicked lower intraday.

May 2021 sell-off

Liquidated on May 17, 2021

The collateral falls 53.0% peak to trough. Starting at 50.0% loan-to-value, the loan could only absorb a 37.5% fall.

Starting health factor

1.60

Lowest health factor

0.75 (May 19, 2021)

Highest starting LTV that survives

37.6%

Collateral top-up needed at the worst point

$6,596 (33%)

Debt at the start

$10,000

Fall that triggers liquidation

37.5%

Health factorHover or tap the chart to read values.

The same loan through every reported crash

Each row is a simplified straight-line path built from the reported fall, not price data.
Crash	Reported ETH fall	Lowest HF	Outcome	Max safe starting LTV	Source
March 2020 COVID crash	−33.0% (Mar 11, 2020 – Mar 12, 2020)	1.07	Survives	53.6%	CoinDesk
May 2021 sell-off	−53.0% (May 12, 2021 – May 19, 2021)	0.75	Liquidated	37.6%	Fortune
Terra/Luna and Three Arrows, to June 2022	−70.0% (Nov 10, 2021 – Jun 18, 2022)	0.48	Liquidated	24.0%	Bloomberg (via Fortune)
FTX collapse, November 2022	−25.0% (Nov 6, 2022 – Nov 13, 2022)	1.20	Survives	60.0%	The Block
August 5, 2024 market rout	−30.0% (Aug 3, 2024 – Aug 5, 2024)	1.12	Survives	56.0%	Cointelegraph

What is driving this result

Health factor = collateral value × liquidation threshold ÷ debt. It starts at 1.60 and moves one-for-one with the collateral price against the debt.
Your debt is in US dollars. Against US-dollar-priced collateral the exchange rate cancels out; it would matter if your debt were in Canadian dollars.
Real crashes bounce on the way down and wick lower within a day. Liquidations happen on the lending market's oracle price, often during wicks, so real outcomes can be worse than a smooth path suggests.
A liquidation usually sells part of your collateral with a penalty set by the market; this replay stops at the first point below 1.0 and does not model the penalty or partial liquidation.

What would have survived?

Each line changes one assumption and holds the others fixed.

Starting loan-to-value: At or below 37.6%. You chose 50.0%.
Leverage: At or below 1.60× exposure on your equity.
Collateral top-up: Adding $6,596 of collateral before the fall (33% more).

Lowest health factor by starting LTV and the size of the fall (80% liquidation threshold, smooth path). Green survives, red is liquidated.
Starting LTV ↓ / Fall →	−20%	−30%	−40%	−50%	−60%	−70%
30%	2.13	1.87	1.60	1.33	1.07	0.80
40%	1.60	1.40	1.20	1.00	0.80	0.60
50%	1.28	1.12	0.96	0.80	0.64	0.48
60%	1.07	0.93	0.80	0.67	0.53	0.40
70%	0.91	0.80	0.69	0.57	0.46	0.34

Estimates from your inputs, calculated in your browser. Education, not financial or tax advice, and not advice from the site showing this calculator.