Market Impact

In the fixed-income market, products like bonds and savings accounts must guarantee the value of the principal. Similarly, for Liquid Treasury Tokens (LTTs) on Xitadel, it is crucial to accurately measure the collateral ratio to ensure that the value of the collateral does not fall below the face value of the LTT. However, forecasting market behavior—especially in the highly volatile crypto market—is nearly impossible.

To safeguard investors, a liquidation process will be triggered if a token’s price drops below a set threshold. In such cases, a large volume of tokens may enter the market in a short period, potentially impacting market prices.

Based on this potential market impact, Xitadel determines the appropriate credit rating, liquidation threshold, and maximum issuance size for each LTT.

Detailed information on these parameters is provided in the attached document below.